10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2019

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.)
400 Atlantic Street, Stamford, Connecticut	06901
(Address of principal executive offices)	(Zip Code)

(203) 905-6090

(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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐

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

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $.10 Par Value	NAVG	The NASDAQ Global Select Market

The number of common shares outstanding as of April 26, 2019 was 29,969,727.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

INDEX

Contents

PART I. FINANCIAL INFORMATION	3
Item 1.      Financial Statements	3
Consolidated Balance Sheets – March 31, 2019 (Unaudited) and December 31, 2018	3
Consolidated Statements of Income (Loss) (Unaudited) – Three Months Ended March 31, 2019 and 2018	4
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) – Three  Months Ended March 31, 2019 and 2018	5
Consolidated Statement of Stockholders’ Equity (Unaudited) –Three Months Ended March 31, 2019 and 2018	6
Consolidated Statements of Cash Flows (Unaudited) – Three Months Ended March 31, 2019 and 2018	7
Notes to Interim Consolidated Financial Statements (Unaudited)	8
Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.      Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.      Controls and Procedures	45
PART II. OTHER INFORMATION	47
Item 1.      Legal Proceedings	47
Item 1A.   Risk Factors	47
Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.      Defaults Upon Senior Securities	47
Item 4.      Mine Safety Disclosures	47
Item 5.      Other Information	47
Item 6.      Exhibits	48
Signatures	50

2

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2019			2018
amounts in thousands, except per share amounts	(Unaudited)
ASSETS
Investments:
Fixed Maturities, available-for-sale, at fair value (amortized cost: 2019: $3,143,622;    2018: $3,125,413)	$	3,159,808		$	3,082,923
Equity Securities, at fair value  (cost: 2019: $353,208; 2018: $361,418)		358,447			339,892
Other Invested Assets		52,274			48,406
Short-Term Investments, available-for-sale, at fair value (amortized cost: 2019: $7,288;    2018: $10,234)		7,287			10,233
Total Investments	$	3,577,816		$	3,481,454
Cash and Cash Equivalents		193,650			155,834
Restricted Cash and Cash Equivalents		47,525			66,320
Premiums Receivable		449,519			380,576
Prepaid Reinsurance Premiums		231,216			226,723
Reinsurance Recoverable on Paid Losses		133,371			118,259
Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses		830,732			820,189
Deferred Policy Acquisition Costs		171,465			158,080
Accrued Investment Income		23,793			22,168
Goodwill and Other Intangible Assets		26,724			27,146
Deferred Income Tax Asset		35,755			49,893
Right-of-Use Asset		44,615			—
Other Assets		90,102			96,807
Total Assets	$	5,856,283		$	5,603,449
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for Losses and Loss Adjustment Expenses	$	2,810,414		$	2,743,973
Unearned Premiums		1,191,609			1,102,735
Reinsurance Balances Payable		164,189			145,027
Senior Notes		264,095			264,052
Current Income Tax Payable, Net		346			1,594
Deferred Income Tax Liability		7,531			7,596
Lease Liability Obligation		53,616			—
Accounts Payable and Other Liabilities		134,100			151,622
Total Liabilities	$	4,625,900		$	4,416,599
Stockholders' Equity:
Preferred Stock ($.10 par value per share, authorized 1,000 shares, none issued)	$	—		$	—
Common Stock ($.10 par value per share, authorized 50,000 shares, issued    36,993 shares for 2019 and 36,805 shares for 2018)		3,696			3,678
Additional Paid-In Capital		375,331			378,274
Treasury Stock, at cost (7,023 shares for 2019 and 2018)		(155,801	)		(155,801	)
Retained Earnings		1,008,395			1,012,220
Accumulated Other Comprehensive Loss		(1,238	)		(51,521	)
Total Stockholders' Equity	$	1,230,383		$	1,186,850
Total Liabilities and Stockholders' Equity	$	5,856,283		$	5,603,449

See accompanying Notes to Interim Consolidated Financial Statements.

3

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)

	Three Months Ended March 31,
amounts in thousands, except per share amounts	2019			2018
Gross Written Premiums	$	580,976		$	495,224
Revenues:
Net Written Premiums		461,667			393,262
Change in Unearned Premiums		(84,478	)		(70,635	)
Net Earned Premiums	$	377,189		$	322,627
Net Investment Income		28,219			23,702
Net Realized and Unrealized Gains (Losses):
Total Other-Than-Temporary Impairment Losses		(20	)		(37	)
Portion of Loss Recognized in Other Comprehensive    Income		20			37
Net Other-Than-Temporary Impairment Losses Recognized    in Earnings		—			—
Net Realized Gains on Investments Sold		393			1,169
Net Unrealized Gains (Losses) on Equity Securities		26,769			(3,181	)
Total Net Realized and Unrealized Gains (Losses)		27,162			(2,012	)
Other Loss		(4,272	)		(117	)
Total Revenues	$	428,298		$	344,200
Expenses:
Net Losses and Loss Adjustment Expenses	$	270,352		$	186,145
Commission Expenses		67,716			54,152
Other Operating Expenses		83,756			62,926
Merger Transaction Costs		850			—
Interest Expense		3,867			3,864
Total Expenses	$	426,541		$	307,087
Income Before Income Taxes	$	1,757		$	37,113
Income Tax Expense		3,495			6,235
Net Income (Loss)	$	(1,738	)	$	30,878
Net Income (Loss) per Common Share:
Basic	$	(0.06	)	$	1.04
Diluted	$	(0.06	)	$	1.02
Average Common Shares Outstanding:
Basic		29,871			29,595
Diluted		29,871			30,137

See accompanying Notes to Interim Consolidated Financial Statements.

4

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

	Three Months Ended March 31,
amounts in thousands	2019			2018
Net Income (Loss)	$	(1,738	)	$	30,878
Other Comprehensive Income (Loss):
Change in Net Unrealized Gains (Losses) on Available-For-Sale Investments:
Unrealized Gains (Losses) on Investments arising during the period, net    of Deferred Tax of $(12,167) and $9,623 in 2019 and 2018, respectively		46,289			(34,305	)
Reclassification adjustment for Net Realized Gains (Losses) included    in Net Income net of Deferred Tax of $(50) and $509 in 2019 and    2018, respectively		189			(1,733	)
Change in Net Unrealized Gains (Losses) on Investments	$	46,478		$	(36,038	)
Change in Other-Than-Temporary Impairments
Non Credit Other-Than-Temporary Impairments arising during the period,    net of Deferred Tax of $4 and $9 in 2019 and 2018, respectively		(16	)		(30	)
Reclassification Adjustment for Other-Than-Temporary Impairment Credit    Losses Recognized in Net Income net of Deferred Tax of $0 in both 2019    and 2018, respectively		—			—
Change in Other-Than-Temporary Impairments	$	(16	)	$	(30	)
Change in Foreign Currency Translation Gains, net of Deferred    Tax of $120 and $(1,082) in 2019 and 2018, respectively		3,821			2,228
Other Comprehensive Income (Loss)	$	50,283		$	(33,840	)
Comprehensive Income (Loss)	$	48,545		$	(2,962	)

See accompanying Notes to Interim Consolidated Financial Statements

5

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

Consolidated Stockholders’ Equity for the three months ended March 31, 2019 and 2018 was as follows:

					Additional											Accumulated Other			Total
	Common Stock				Paid-in			Treasury Stock					Retained			Comprehensive			Stockholders'
amounts in thousands	Shares		Amount		Capital			Shares		Amount			Earnings			Income (Loss)			Equity
Balance, December 31, 2018		36,805	$	3,678	$	378,274			7,023	$	(155,801	)	$	1,012,220		$	(51,521	)	$	1,186,850
Net Loss		—		—		—			—		—			(1,738	)		—			(1,738	)
Dividends Declared		—		—		—			—		—			(2,087	)		—			(2,087	)
Changes in Other Comprehensive Income:
Change in Net Unrealized Gain on Available-For-Sale    Investments		—		—		—			—		—			—			46,478			46,478
Change in Net Non-Credit Other-Than-    Temporary Impairment Losses		—		—		—			—		—			—			(16	)		(16	)
Change in Foreign Currency Translation Gain		—		—		—			—		—			—			3,821			3,821
Total Other Comprehensive Income		—		—		—			—		—			—			50,283			50,283
Shares Issued (1)		188		18		(5,237	)		—		—			—			—			(5,219	)
Share-Based Compensation		—		—		2,294			—		—			—			—			2,294
Balance, March 31, 2019		36,993	$	3,696	$	375,331			7,023	$	(155,801	)	$	1,008,395		$	(1,238	)	$	1,230,383

					Additional											Accumulated Other			Total
	Common Stock				Paid-in			Treasury Stock					Retained			Comprehensive			Stockholders'
amounts in thousands	Shares		Amount		Capital			Shares		Amount			Earnings			Income (Loss)			Equity
Balance, December 31, 2017		36,530	$	3,650	$	376,868			7,023	$	(155,801	)	$	981,380		$	19,868		$	1,225,965
Net Income		—		—		—			—		—			30,878			—			30,878
Dividends Declared		—		—		—			—		—			(2,069	)		—			(2,069	)
Changes in Comprehensive Income:
Change in Net Unrealized Loss on Available-For-Sale    Investments		—		—		—			—		—			—			(36,038	)		(36,038	)
Change in Net Non-Credit Other-Than-    Temporary Impairment Losses		—		—		—			—		—			—			(30	)		(30	)
Change in Foreign Currency Translation Gain		—		—		—			—		—			—			2,228			2,228
Total Comprehensive Loss		—		—		—			—		—			—			(33,840	)		(33,840	)
Cumulative Effect of Adoption of ASU 2016-01 at    January 1st, Net of Tax		—		—		—			—		—			7,748			(7,748	)		—
Cumulative Effect of Adoption of ASU 2018-02 at    January 1st, Net of Tax		—		—		—			—		—			(2,828	)		2,828			—
Shares Issued (1)		203		20		(4,988	)		—		—			—			—			(4,968	)
Share-Based Compensation		—		—		986			—		—			—			—			986
Balance, March 31, 2018		36,733	$	3,670	$	372,866			7,023	$	(155,801	)	$	1,015,109		$	(18,892	)	$	1,216,952

(1) - Includes shares issued under the Second Amended and Restated 2005 Stock Incentive Plan to Directors, the Employee Stock Purchase Plan, and the impact of employee tax withholding on stock compensation.

See accompanying Notes to Interim Consolidated Financial Statements.

6

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended March 31,
amounts in thousands	2019			2018
Operating Activities:
Net Income (Loss)	$	(1,738	)	$	30,878
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
Depreciation & Amortization		1,248			807
Amortization of Finite-Lived Intangible Assets		324			—
Share-Based Compensation		2,294			986
Deferred Income Taxes		1,798			(5	)
Total Net Realized and Unrealized (Gains) Losses		(27,162	)		2,012
Changes in Assets and Liabilities:
Reinsurance Recoverable on Paid and Unpaid Losses and Loss Adjustment Expenses		(25,738	)		9,382
Reserves for Losses and Loss Adjustment Expenses		66,190			6,353
Prepaid Reinsurance Premiums		(4,478	)		(237	)
Unearned Premiums		88,976			70,755
Premiums Receivable		(69,570	)		(61,403	)
Deferred Policy Acquisition Costs		(13,368	)		(16,328	)
Accrued Investment Income		(1,614	)		(1,247	)
Reinsurance Balances Payable		19,132			(7,468	)
Current Income Tax Receivable, Net		1,627			6,251
Other		(7,021	)		(4,973	)
Net Cash Provided by Operating Activities	$	30,900		$	35,763
Investing Activities:
Fixed Maturities
Redemptions and Maturities	$	71,665		$	175,867
Sales		83,768			110,089
Purchases		(174,872	)		(246,359	)
Equity Securities
Sales		9,579			14,989
Purchases		(1,991	)		(36,799	)
Net Sales and Purchases of Other Invested Assets		(4,039	)		(4,585	)
Net Sales, Maturities and Purchases of Short-Term Investments		907			22
Net Change in Unsettled Security Transactions		11,051			21,581
Net Purchase of Property and Equipment		(1,111	)		(1,150	)
Net Cash Provided by (Used in) Investing Activities	$	(5,043	)	$	33,655
Financing Activities:
Proceeds from Employee Stock Purchase Plan	$	—		$	452
Payment of Employee Tax Withholding on Stock Compensation		(6,829	)		(5,508	)
Dividends Paid		(2,087	)		(2,069	)
Net Cash Used in Financing Activities	$	(8,916	)	$	(7,125	)
Effect of Exchange Rate on Unrestricted and Restricted Cash and Cash Equivalents	$	2,080		$	2,876
Change in Unrestricted and Restricted Cash and Cash Equivalents	$	19,021		$	65,169
Unrestricted and Restricted Cash and Cash Equivalents at Beginning of Year		222,154			158,964
Unrestricted and Restricted Cash and Cash Equivalents at End of Period	$	241,175		$	224,133
Supplemental Information:
Income Taxes Paid, Net	$	115		$	294
Interest Paid	$	—		$	—
Issuance of Stock to Directors	$	745		$	783

See accompanying Notes to Interim Consolidated Financial Statements.

7

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited)

NOTE 1. ORGANIZATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless the context requires otherwise, the terms “we,” “us,” “our” or “our Company” are used to mean The Navigators Group, Inc., a Delaware holding company established in 1982, and its subsidiaries. The term “Parent Company” is used to mean The Navigators Group, Inc. without its subsidiaries.

Organization

We are an international insurance company with a long-standing area of specialization in Marine insurance. We also offer Property and Casualty (“P&C”) insurance, primarily general liability coverage and umbrella & excess liability coverage to commercial enterprises through our Primary and Excess Casualty divisions. We have also developed niches in Professional Liability insurance, through our Directors & Officers (“D&O”) and Errors & Omissions (“E&O”) divisions, as well as assumed reinsurance products.

We operate through various wholly-owned insurance and service companies. Our subsidiaries domiciled in the United States (“U.S.”) include two insurance companies, Navigators Insurance Company (“NIC”) and Navigators Specialty Insurance Company (“NSIC”), as well as our U.S. underwriting agency, Navigators Management Company (“NMC”). NIC includes a branch in the United Kingdom (“U.K.”). We also have operations domiciled in the U.K., Hong Kong and Europe. Navigators International Insurance Company Ltd. (“NIIC”), Navigators Management (U.K.) Ltd. (“NMUK”) and Navigators Underwriting Ltd. (“NUL”) are domiciled in the U.K. and NUL includes European branches. Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency, manages and provides the capital, through Navigators Corporate Underwriters Ltd. (“NCUL”), for our Lloyd’s Syndicate 1221 (the “Syndicate”), and is also domiciled in the U.K. We control 100% of the Syndicate’s stamp capacity. We also control 100% of Navigators Holdings (Europe) NV, which has a 100% ownership interest in Bracht, Deckers & Mackelbert NV, an insurance underwriting agency organized under the laws of Belgium (“BDM”), Assurances Continentales – Continentale Verzekeringen NV, an insurance company licensed under the laws of Belgium (“ASCO”), and a wholly-owned subsidiary of ASCO, Canal Re S.A., a reinsurance company licensed under the laws of the Grand Duchy of Luxembourg (“Canal Re”). This group of three companies, which was acquired at the end of second quarter 2018, will be referred to as the “Navigators Insurance Companies of Europe Group” or “NICE Group.”

On August 22, 2018, our Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Hartford Financial Services Group, Inc. (“The Hartford”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford (the “Merger”). The Merger Agreement provides for the automatic extension of the outside date from May 1, 2019 to July 1, 2019 to allow the parties additional time to satisfy a mutual condition to closing relating to the receipt of all required regulatory approvals. As of May 1, 2019, the completion of the Merger remained subject to the approval of the New York State Department of Financial Services (the “NYDFS”) and the automatic extension has been triggered. The Company and The Hartford continue to pursue a timely approval of the change in control application with the NYDFS in order to complete the Merger as promptly as possible. Refer to Note 2 Merger for further information.

Basis of Presentation

The Consolidated Balance Sheet at March 31, 2019 and the Consolidated Statements of Income (Loss), Comprehensive Income (Loss), Stockholders’ Equity and Cash Flows for the periods ended March 31, 2019 and 2018 are unaudited. The Balance Sheet at December 31, 2018 is derived from our audited Financial Statements. The accompanying Interim Consolidated Financial Statements reflect all adjustments, which, in the opinion of management, are necessary to fairly present the results of our Company for the interim periods presented on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. 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 Interim Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018.

8

Income Taxes

The Company’s effective income tax rate is dependent on many factors, including the nature of many amounts, the mix of revenues and expenses between U.S. and foreign entities that are subject to income taxes at differing rates in various jurisdictions and changes in foreign operating locations in response to Brexit. Our Effective Tax Rate for the quarter differs from the federal tax rate of 21% primarily due to an increase in the valuation allowance against our Continental European business, partially offset by an excess tax benefit related to the vesting of stock compensation at fair market value.

New Accounting Standards Adopted in 2019

Leases

Effective January 1, 2019, our Company adopted ASU 2016-02, “Leases (Topic 842)” which provides a new comprehensive model for lease accounting. Topic 842 was subsequently amended by ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-11, Targeted Improvements; and ASU 2019-01, Codification Improvements. The new standard requires a lessee to recognize a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard requires a modified retrospective transition approach, which is applied to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We used an effective date of January 1, 2019 as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The new standard provides a number of optional practical expedients in transition. We elected the “package of practical expedients,” which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. The new standard also provides practical expedients for an entity’s ongoing accounting. We currently do not have any leases with a term shorter than 12 months. We also elected the practical expedient to not separate lease and non-lease components for certain classes of leases.

The adoption of the guidance resulted in the Company recognizing a ROU asset of $44.6 million and a lease liability of $53.6 million on the Consolidated Balance Sheet at March 31, 2019, with the difference attributable to contractual incentives contained within some of our leases as well as lease payment schedules that change over time resulting in deferred rent. The adoption of this guidance did not materially impact our results of operations, financial condition or liquidity.

Callable Debt Securities

Effective January 1, 2019, our Company adopted ASU 2017-08, “Premium Amortization on Purchased Callable Debt Securities” which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Significant Accounting Policies

There were no notable changes in our significant accounting policies subsequent to our Annual Report on Form 10-K for the year ended December 31, 2018.

NOTE 2. MERGER

On August 22, 2018, our Company entered into the Merger Agreement with The Hartford whereby, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford. Pursuant to the Merger Agreement, at the effective time of the Merger, holders of the Company’s common shares will be entitled to receive consideration of $70.00 in cash per common share (the “Merger Consideration”). The Merger Agreement provides for the automatic extension of the outside date from May 1, 2019 to July 1, 2019 to allow the parties additional time to satisfy a mutual condition to closing relating to the receipt of all required regulatory approvals. As of May 1, 2019, the completion of the Merger remained subject to the approval of the New York State Department of Financial Services (the “NYDFS”) and the automatic extension has been triggered. The Company and The Hartford continue to pursue a timely approval of the change in control application with the NYDFS in order to complete the Merger as promptly as possible.

9

The Merger Agreement contains various covenants of our Company and The Hartford. These covenants include interim operating covenants that, subject to certain exceptions, (i) require the Company to (1) conduct its business in all material respects in the ordinary course of business consistent with past practice, (2) use reasonable best efforts to preserve substantially intact, consistent with past practice, the Company’s business organization and (3) preserve, consistent with past practice, existing relations and goodwill with customers, producers, reinsurance providers, governmental authorities and other persons with whom the Company or its subsidiaries have significant business relationships, and (ii) restrict the Company’s ability to take certain actions prior to the effective time of the Merger without The Hartford’s consent (such consent, in certain cases, not to be unreasonably withheld, conditioned or delayed), which include, subject to certain exceptions, issuing additional common shares, incurring additional indebtedness, selling or purchasing material assets, making unbudgeted capital expenditures, making loans or investments (or disposing of investments) not permitted by the Company’s investment guidelines, increasing compensation other than in ordinary course, making material changes to accounting, underwriting, or reserving practices, making material tax elections, settling material litigation, or entering into, modifying or terminating material contracts.

NOTE 3. SEGMENT INFORMATION

We report our results of operations consistent with the manner in which our Chief Operating Decision Maker reviews the business to assess performance through our reporting segments: U.S. Insurance, International Insurance (“Int’l Insurance”), Global Reinsurance (“GlobalRe”) and Corporate. 

We classify our business into three underwriting segments: U.S. Insurance, Int’l Insurance and GlobalRe. Both the U.S. Insurance and Int’l Insurance reporting segments are each comprised of three operating segments: Marine, P&C, and Professional Liability.

We evaluate the performance of each of the underwriting segments based on underwriting results. Underwriting results are measured based on Underwriting Profit or Loss and the related Combined Ratio, which are both measures of underwriting profitability. Underwriting Profit (Loss) is calculated from Net Earned Premiums less the sum of Net Losses and Loss Adjustment Expenses (“LAE”), Commission Expenses, Other Operating Expenses and Other Underwriting Income (Expense). The Combined Ratio is derived by dividing the sum of Net Losses and LAE, Commission Expenses, Other Operating Expenses and Other Underwriting 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. Our underwriting performance is evaluated separately from the rest of our operations.

The performance of our investment portfolios, our liquidity and capital resource needs, our foreign currency exposure and our tax planning strategies are evaluated on a consolidated basis within our Corporate segment. We do not allocate our assets by underwriting segment as we evaluate the underwriting results of these segments separately from the results of our investments portfolio.

10

Financial data by segment for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31, 2019
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross Written Premiums	$	291,967		$	156,129		$	132,880		$	—		$	580,976
Ceded Written Premiums		(73,795	)		(37,731	)		(7,783	)		—			(119,309	)
Net Written Premiums	$	218,172		$	118,398		$	125,097		$	—		$	461,667
Retention Ratio		74.7	%		75.8	%		94.1	%		—			79.5	%
Net Earned Premiums	$	202,037		$	108,913		$	66,239		$	—		$	377,189
Net Losses and LAE		(151,125	)		(75,458	)		(43,769	)		—			(270,352	)
Commission Expenses		(24,786	)		(26,447	)		(16,433	)		(50	)		(67,716	)
Other Operating Expenses		(43,210	)		(32,422	)		(8,124	)		—			(83,756	)
Other Underwriting Income (Expense)		95			1,034			(56	)		50			1,123
Underwriting Loss	$	(16,989	)	$	(24,380	)	$	(2,143	)	$	—		$	(43,512	)
Net Investment Income											28,219			28,219
Total Net Realized and Unrealized Gains											27,162			27,162
Interest Expense											(3,867	)		(3,867	)
Other Loss											(5,395	)		(5,395	)
Merger Transaction Costs											(850	)		(850	)
Income (Loss) Before Income Taxes	$	(16,989	)	$	(24,380	)	$	(2,143	)	$	45,269		$	1,757
Income Tax Expense											(3,495	)		(3,495	)
Net Loss													$	(1,738	)
Losses and LAE Ratio		74.8	%		69.3	%		66.1	%					71.7	%
Commission Expense Ratio		12.3	%		24.3	%		24.8	%					18.0	%
Other Operating Expense Ratio (2)		21.3	%		28.8	%		12.3	%					21.8	%
Combined Ratio		108.4	%		122.4	%		103.2	%					111.5	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Three Months Ended March 31, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross Written Premiums	$	239,928		$	127,872		$	127,424		$	—		$	495,224
Ceded Written Premiums		(66,581	)		(28,888	)		(6,493	)		—			(101,962	)
Net Written Premiums	$	173,347		$	98,984		$	120,931		$	—		$	393,262
Retention Ratio		72.2	%		77.4	%		94.9	%		—			79.4	%
Net Earned Premiums	$	172,913		$	93,210		$	56,504		$	—		$	322,627
Net Losses and LAE		(110,422	)		(45,843	)		(29,880	)		—			(186,145	)
Commission Expenses		(20,861	)		(19,756	)		(13,768	)		233			(54,152	)
Other Operating Expenses		(36,991	)		(20,530	)		(5,405	)		—			(62,926	)
Other Underwriting Income (Expense)		98			—			138			(233	)		3
Underwriting Profit	$	4,737		$	7,081		$	7,589		$	—		$	19,407
Net Investment Income											23,702			23,702
Total Net Realized and Unrealized Losses											(2,012	)		(2,012	)
Interest Expense											(3,864	)		(3,864	)
Other Loss											(120	)		(120	)
Income Before Income Taxes	$	4,737		$	7,081		$	7,589		$	17,706		$	37,113
Income Tax Expense											(6,235	)		(6,235	)
Net Income													$	30,878
Losses and LAE Ratio		63.9	%		49.2	%		52.9	%					57.7	%
Commission Expense Ratio		12.1	%		21.2	%		24.4	%					16.8	%
Other Operating Expense Ratio (2)		21.3	%		22.0	%		9.3	%					19.5	%
Combined Ratio		97.3	%		92.4	%		86.6	%					94.0	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

11

Revenue by operating segment for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31, 2019									Three Months Ended March 31, 2018									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			Net Written Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	47,801	$	(15,077	)	$	32,724	$	23,357	$	41,724	$	(17,480	)	$	24,244	$	21,092		14.6	%		(13.7	%)		35.0	%		10.7	%
P&C		207,802		(53,544	)		154,258		151,171		168,193		(44,912	)		123,281		127,590		23.5	%		19.2	%		25.1	%		18.5	%
ProfessionalLiability		36,364		(5,174	)		31,190		27,509		30,011		(4,189	)		25,822		24,231		21.2	%		23.5	%		20.8	%		13.5	%
Total	$	291,967	$	(73,795	)	$	218,172	$	202,037	$	239,928	$	(66,581	)	$	173,347	$	172,913		21.7	%		10.8	%		25.9	%		16.8	%
Int'l Insurance
Marine	$	54,861	$	(11,236	)	$	43,625	$	35,744	$	56,478	$	(8,054	)	$	48,424	$	39,279		(2.9	%)		39.5	%		(9.9	%)		(9.0	%)
P&C		58,567		(14,037	)		44,530		36,033		33,960		(13,667	)		20,293		21,769		72.5	%		2.7	%		119.4	%		65.5	%
Professional Liability		42,701		(12,458	)		30,243		37,136		37,434		(7,167	)		30,267		32,162		14.1	%		73.8	%		(0.1	%)		15.5	%
Total	$	156,129	$	(37,731	)	$	118,398	$	108,913	$	127,872	$	(28,888	)	$	98,984	$	93,210		22.1	%		30.6	%		19.6	%		16.8	%
GlobalRe	$	132,880	$	(7,783	)	$	125,097	$	66,239	$	127,424	$	(6,493	)	$	120,931	$	56,504		4.3	%		19.9	%		3.4	%		17.2	%
Total	$	580,976	$	(119,309	)	$	461,667	$	377,189	$	495,224	$	(101,962	)	$	393,262	$	322,627		17.3	%		17.0	%		17.4	%		16.9	%

12

NOTE 4.  INVESTMENTS

The following tables set forth our Company’s Available-For-Sale Investments as of March 31, 2019 and December 31, 2018 and include Other-Than-Temporary-Impairment (“OTTI”) securities recognized within Accumulated Other Comprehensive Income (“AOCI”):

	March 31, 2019
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	226,093	$	1,334	$	(3,050	)	$	227,809
States, Municipalities and Political Subdivisions		698,980		21,932		(586	)		677,634
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		329,582		1,106		(8,771	)		337,247
Residential Mortgage Obligations		154,149		1,538		(295	)		152,906
Asset-Backed Securities		532,027		1,746		(4,309	)		534,590
Commercial Mortgage-Backed Securities		199,450		2,089		(1,397	)		198,758
Subtotal	$	1,215,208	$	6,479	$	(14,772	)	$	1,223,501
Corporate Exposures (1)		1,019,527		12,910		(8,061	)		1,014,678
Total Fixed Maturities	$	3,159,808	$	42,655	$	(26,469	)	$	3,143,622
Short-Term Investments		7,287		—		(1	)		7,288
Total Available-For-Sale Investments	$	3,167,095	$	42,655	$	(26,470	)	$	3,150,910

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2018
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	239,776	$	901	$	(3,957	)	$	242,832
States, Municipalities and Political Subdivisions		646,551		10,734		(3,448	)		639,265
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		335,542		843		(13,118	)		347,817
Residential Mortgage Obligations		138,373		604		(530	)		138,299
Asset-Backed Securities		531,991		1,018		(8,040	)		539,013
Commercial Mortgage-Backed Securities		188,201		858		(2,816	)		190,159
Subtotal	$	1,194,107	$	3,323	$	(24,504	)	$	1,215,288
Corporate Exposures (1)		1,002,489		3,101		(28,640	)		1,028,028
Total Fixed Maturities	$	3,082,923	$	18,059	$	(60,549	)	$	3,125,413
Short-Term Investments		10,233		—		(1	)		10,234
Total Available-For-Sale Investments	$	3,093,156	$	18,059	$	(60,550	)	$	3,135,647

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

The following table sets forth our Company’s Equity Securities at fair value as of March 31, 2019 and December 31, 2018:

	As of March 31, 2019
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	181,512	$	11,495	$	(2,644	)	$	172,661
Preferred Stocks		176,935		2,082		(5,694	)		180,547
Total Equity Securities	$	358,447	$	13,577	$	(8,338	)	$	353,208

13

	December 31, 2018
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	166,353	$	4,738	$	(15,984	)	$	177,599
Preferred Stocks		173,539		511		(10,791	)		183,819
Total Equity Securities	$	339,892	$	5,249	$	(26,775	)	$	361,418

Our Company made investments in certain companies, which are reported as Other Invested Assets on the Consolidated Balance Sheet and accounted for using the equity method.  In applying the equity method, these investments were initially recorded at cost and subsequently adjusted based on our Company’s proportionate share of the net income or loss of the investments. Our initial purchase price for these investments was $2.0 million with a current carrying value of $1.9 million at March 31, 2019 and December 31, 2018, as reflected on our Consolidated Balance Sheet.  

Other Invested Assets also includes overseas deposits with a fair value of $50.4 million at March 31, 2019 and $46.5 million at December 31, 2018.  The overseas deposits consist of investments in private funds which are managed centrally by The Corporation of Lloyd’s in support of all Lloyd’s market participants. The funds consist of fixed income securities, bank deposits, and cash invested in local markets which are intended to fulfill regulatory deposit requirements in worldwide jurisdictions. Our Company’s ability to withdraw from the funds is restricted by an annual and quarterly funding and release process managed by Lloyd’s in conjunction with Syndicate 1221’s capital requirements in various jurisdictions.

As of March 31, 2019 and December 31, 2018, our Company did not have a concentration of greater than 5% of invested assets in a single non-government backed issuer.

As of March 31, 2019 and December 31, 2018, Fixed Maturities for which Non-Credit OTTI was previously recognized and included in AOCI were in a Net Unrealized Gain position of $0.3 million.

The fair value of our Company’s Fixed Maturities investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, foreign exchange rates and credit spreads. Our Company does not have the intent to sell nor is it more likely than not that it will have to sell Fixed Maturities 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. Our Company does not intend to sell, and it is more likely than not that our Company will not be required to sell, these securities before the recovery of the amortized cost basis. Our Company 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 our 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 Maturities categorized by the number of years until maturity as of March 31, 2019 are shown in the following table:

	March 31, 2019
	Fair		Amortized
amounts in thousands	Value		Cost
Due in one year or less	$	145,022	$	145,859
Due after one year through five years		805,156		802,331
Due after five years through ten years		372,917		362,404
Due after ten years		621,505		609,527
Mortgage-Backed and Asset-Backed Securities		1,215,208		1,223,501
Total	$	3,159,808	$	3,143,622

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. 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. Due to the periodic repayment of principal, our Mortgage-Backed and Asset-Backed Securities are estimated to have an effective maturity of approximately 5.1 years.

14

The following tables summarize all Available-For-Sale securities in a gross unrealized loss position as of March 31, 2019 and December 31, 2018, showing the aggregate fair value and gross unrealized loss by the length of time those securities have continuously been in a gross unrealized loss position:

	March 31, 2019
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	32,603	$	(377	)	$	121,784	$	(2,673	)	$	154,387	$	(3,050	)
States, Municipalities and Political Subdivisions		6,964		(4	)		76,493		(582	)		83,457		(586	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		2,924		(19	)		291,576		(8,752	)		294,500		(8,771	)
Residential Mortgage Obligations		35,368		(36	)		14,258		(259	)		49,626		(295	)
Asset-Backed Securities		266,463		(3,490	)		96,222		(819	)		362,685		(4,309	)
Commercial Mortgage-Backed Securities		55,185		(141	)		42,717		(1,256	)		97,902		(1,397	)
Subtotal	$	359,940	$	(3,686	)	$	444,773	$	(11,086	)	$	804,713	$	(14,772	)
Corporate Exposures (1)		35,038		(461	)		438,306		(7,600	)		473,344		(8,061	)
Total Fixed Maturities	$	434,545	$	(4,528	)	$	1,081,356	$	(21,941	)	$	1,515,901	$	(26,469	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2018
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	101,395	$	(2,486	)	$	112,195	$	(1,471	)	$	213,590	$	(3,957	)
States, Municipalities and Political Subdivisions		123,479		(1,274	)		105,405		(2,174	)		228,884		(3,448	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		34,819		(814	)		270,997		(12,304	)		305,816		(13,118	)
Residential Mortgage Obligations		70,965		(249	)		10,110		(281	)		81,075		(530	)
Asset-Backed Securities		345,437		(6,950	)		77,362		(1,090	)		422,799		(8,040	)
Commercial Mortgage-Backed Securities		58,877		(282	)		41,477		(2,534	)		100,354		(2,816	)
Subtotal	$	510,098	$	(8,295	)	$	399,946	$	(16,209	)	$	910,044	$	(24,504	)
Corporate Exposures (1)		481,057		(15,456	)		300,113		(13,184	)		781,170		(28,640	)
Total Fixed Maturities	$	1,216,029	$	(27,511	)	$	917,659	$	(33,038	)	$	2,133,688	$	(60,549	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Our Company analyzes impaired securities quarterly to determine if any impairments are other-than-temporary.  The above securities with unrealized losses are deemed to be temporarily impaired based on our evaluation.

As of March 31, 2019, there were 511 Fixed Maturities in an unrealized loss position. The gross unrealized losses for the greater than 12 months category consists primarily of Agency Mortgage-Backed Securities and Corporate Bonds due to an increase in interest rates.  The gross unrealized losses for the less than 12 months category consists primarily of Asset-Backed Securities due to a lower demand for floating rate securities. At December 31, 2018, there were 808 Fixed Maturities in an unrealized loss position. In the above table, the gross unrealized loss for the greater than 12 months category consists primarily of Agency Residential Mortgage-Backed Securities and Hybrid bonds and Redeemable Preferred stocks, which are reported in Corporate Exposures, and is mostly due to an increase in interest rates and spread widening.  The gross unrealized loss for the less than 12 months category consists primarily of Hybrid bonds and Redeemable Preferred stocks, which are reported in Corporate Exposures, and Asset-Backed Securities mainly due to spread widening.      

15

As of March 31, 2019 and December 31, 2018, the largest unrealized loss by a non-government backed issuer in the investment portfolio was $1.8 million and $3.7 million, respectively.

Our Company’s ability to hold securities is supported by sufficient cash flow from our operations and from maturities within our investment portfolio in order to meet our claims payments and other disbursement obligations arising from our 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.  

Our Company did not have any credit related OTTI losses during the three months ended March 31, 2019 and 2018.

As of March 31, 2019 and 2018, the cumulative amounts related to our Company’s credit loss portion of the OTTI losses on Fixed Maturities was $2.3 million and $2.4 million, respectively.    

Our Company’s Net Investment Income was derived from the following sources:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Fixed Maturities	$	25,015		$	21,052
Equity Securities		3,155			2,925
Short-Term Investments, Cash & Cash Equivalents		570			227
Other Invested Assets		228			186
Total Investment Income	$	28,968		$	24,390
Investment Expenses		(749	)		(688	)
Net Investment Income	$	28,219		$	23,702

Realized Gains and Losses on Investments Sold, excluding net OTTI losses recognized in earnings, for the periods indicated, were as follows:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Fixed Maturities:
Gains	$	784		$	1,806
Losses		(265	)		(275	)
Fixed Maturities, Net	$	519		$	1,531
Short-Term Investments, Cash & Cash Equivalents:
Gains	$	—		$	18
Losses		(17	)		(174	)
Short-Term, Net	$	(17	)	$	(156	)
Other Invested Assets:
Gains	$	134		$	50
Losses		—			(41	)
Other Invested Assets, Net	$	134		$	9
Equity Securities:
Gains	$	3		$	—
Losses		(246	)		(215	)
Equity Securities, Net	$	(243	)	$	(215	)
Net Realized Gains on Investments Sold	$	393		$	1,169

16

The following table presents the portion of Net Unrealized Gains (Losses) that relates to Equity Securities recognized during the three months ended March 31, 2018 and 2019:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Equity Securities:
Total Net Realized and Unrealized Gains (Losses) recognized	$	26,526		$	(3,396	)
Less: Net Realized Losses on Investments Sold		(243	)		(215	)
Net Unrealized Gains (Losses) recognized	$	26,769		$	(3,181	)

NOTE 5. FAIR VALUE MEASUREMENT

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

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed equities 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 our 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 following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements described above, our Company’s Fixed Maturities and Equity Securities by asset class that are measured at fair value on a recurring basis, as well as the fair value of the 5.75% Senior Notes due October 15, 2023 (the “Senior Notes”) carried at amortized cost as of March 31, 2019 and December 31, 2018:

	March 31, 2019
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	26,308	$	199,785	$	—	$	226,093
States, Municipalities and Political Subdivisions		—		698,980		—		698,980
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		329,582		—		329,582
Residential Mortgage Obligations		—		154,149		—		154,149
Asset-Backed Securities		—		532,027		—		532,027
Commercial Mortgage-Backed Securities		—		199,450		—		199,450
Subtotal	$	—	$	1,215,208	$	—	$	1,215,208
Corporate Exposures		—		1,019,527		—		1,019,527
Total Fixed Maturities	$	26,308	$	3,133,500	$	—	$	3,159,808
Equity Securities:
Common Stocks	$	34,678	$	146,834	$	—	$	181,512
Preferred Stocks		—		176,935		—		176,935
Total Equity Securities	$	34,678	$	323,769	$	—	$	358,447
Short-Term Investments		—		7,287		—		7,287
Total Assets Measured at Fair Value	$	60,986	$	3,464,556	$	—	$	3,525,542
Senior Notes	$	—	$	283,554	$	—	$	283,554
Total Liabilities Measured at Fair Value	$	—	$	283,554	$	—	$	283,554

17

	December 31, 2018
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	35,537	$	204,239	$	—	$	239,776
States, Municipalities and Political Subdivisions		—		646,551		—		646,551
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		335,542		—		335,542
Residential Mortgage Obligations		—		138,373		—		138,373
Asset-Backed Securities		—		531,991		—		531,991
Commercial Mortgage-Backed Securities		—		188,201		—		188,201
Subtotal	$	—	$	1,194,107	$	—	$	1,194,107
Corporate Exposures		—		1,002,489		—		1,002,489
Total Fixed Maturities	$	35,537	$	3,047,386	$	—	$	3,082,923
Equity Securities:
Common Stocks	$	35,029	$	131,324	$	—	$	166,353
Preferred Stocks		—		173,539		—		173,539
Total Equity Securities	$	35,029	$	304,863	$	—	$	339,892
Short-Term Investments		—		10,233		—		10,233
Total Assets Measured at Fair Value	$	70,566	$	3,362,482	$	—	$	3,433,048
Senior Notes	$	—	$	278,150	$	—	$	278,150
Total Liabilities Measured at Fair Value	$	—	$	278,150	$	—	$	278,150

Other financial assets and liabilities including Cash, Premium Receivable, Reinsurance Recoverable and Reinsurance Balances Payable are carried at cost, which approximates fair value. Our Company has overseas deposits in Other Invested Assets of $50.4 million and $46.5 million at March 31, 2019 and December 31, 2018, respectively, which is measured at fair value using the net asset value (“NAV”) as a practical expedient.

Our Company did not have any transfers between Level 1 and Level 2 classifications for the three months ended March 31, 2019. 

As of March 31, 2019, our Company did not have any Level 3 assets.

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

The Company had goodwill and other intangible assets of $26.7 million and $27.1 million at March 31, 2019 and December 31, 2018, respectively.

Goodwill

The following table shows an analysis of goodwill by reporting segment:

	Three Months Ended March 31, 2019
	U.S.		Int'l
amounts in thousands	Insurance		Insurance			Total
Goodwill at Beginning of the Period	$	1,978	$	14,840		$	16,818
Foreign Currency Translation Adjustment		—		(31	)		(31	)
Goodwill at End of the Period	$	1,978	$	14,809		$	16,787

18

Intangibles

The gross carrying value, accumulated amortization, and weighted average amortization period of intangible assets by type at March 31, 2019 was as follows:

	As of March 31, 2019
amounts in thousands	Gross Carrying Amount		Accumulated Amortization			Weighted Average Amortization Period
Finite-Lived Assets
ASCO Customer Relationships	$	3,260	$	(245	)	10 years
ASCO VOBA		1,649		(309	)	4 years
BDM Broker Networks		976		(49	)	15 years
BDM Trade Name		480		(360	)	1 year
Total	$	6,365	$	(963	)
Indefinite-Lived Assets
ASCO European Licenses	$	2,399	indefinite
NUAL Lloyd's Syndicate Capacity		2,136	indefinite
Total	$	4,535

The amortization of the Finite-Lived Assets was recognized within Other Operating Expenses on our Consolidated Statements of Income (Loss) with the exception of the amortization of the value of business acquired (“VOBA”) asset, which was recognized within Commission Expenses.

NOTE 7. LOSS RESERVES

We establish reserves for the estimated unpaid ultimate liability for losses and LAE under the terms of our policies and agreements. The determination of Reserves for Losses and LAE is partially dependent upon the receipt of information from agents and brokers. Reserves include estimates for both claims that have been reported and for those that have been incurred but not reported (“IBNR”), and include estimates of expenses associated with processing and settling these claims. Reserves are recorded in Reserves for Losses and LAE in the Consolidated Balance Sheets. Our estimates and judgments may be revised as additional experience and other data become available and are reviewed, as new or improved methodologies are developed, or as laws change. Frequency/severity analyses are also performed for certain books of business. To the extent that reserves are found deficient or redundant, a strengthening or release is recognized as a charge or credit to earnings.

The following table summarizes our Company’s Reserves for Losses and LAE activity for the three months ended March 31, 2019 and 2018:

	For the Three Months Ended March 31,
amounts in thousands	2019			2018
Net Reserves for Losses and LAE at Beginning of Year	$	1,923,784		$	1,705,380
Provision for Losses and LAE for Claims Occurring in the Current Year		218,029			184,179
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years		52,323			1,966
Incurred Losses and LAE	$	270,352		$	186,145
Losses and LAE Paid for Claims Occurring During:
Current Year		(19,251	)		(9,206	)
Prior Years		(203,287	)		(155,860	)
Losses and LAE Payments	$	(222,538	)	$	(165,066	)
Foreign Currency Adjustment		8,084			4,980
Net Reserves for Losses and LAE at End of Period		1,979,682			1,731,439
Reinsurance Recoverables on Unpaid Losses and LAE		830,732			790,388
Gross Reserves for Losses and LAE at End of Period	$	2,810,414		$	2,521,827

19

For the three months ended March 31, 2019, our Incurred Losses and LAE increased $84.2 million as compared to the same period in 2018, driven by a $50.4 million increase in net prior AY reserve strengthening, as well as an increase due to growth in Net Earned Premium over the prior year including the impact of additional premium from the NICE Group which was acquired at the end of second quarter 2018.

For the three months ended March 31, 2019, we recognized total net catastrophe losses of $2.0 million, including a loss from the Russian River Flood in California.  This compared to no catastrophe losses for the same period in 2018.

For the three months ended March 31, 2019, we recognized $52.3 million of net prior AY reserve strengthening, including the following:

• $26.6 million from our U.S. Insurance reporting segment driven by $23.4 million of strengthening within Marine mostly related to an increase in our IBNR provision for run-off business for accident years prior to 1988 within our Marine Liability product line, $2.2 million in Professional Liability driven by unfavorable loss emergence on our Real Estate product, and $1.0 million in P&C due to unfavorable loss emergence in our Primary Casualty and Property divisions, partially offset by favorable loss emergence in our Commercial Excess Casualty and Environmental business lines.

• $16.8 million from our Int’l Insurance reporting segment driven by $15.6 million of strengthening within Professional Liability mostly related to large loss activity within our D&O division and $2.0 million within Marine primarily due to loss development on net prior AY catastrophe losses.  This reserve strengthening was partially offset by $0.8 million of release within our P&C operating segment, mostly due to favorable loss emergence on net prior AY catastrophe losses.

• $8.9 million from our GlobalRe reporting segment driven by $5.6 million and $5.3 million of strengthening within our Specialty Casualty and P&C products, respectively, related to unfavorable loss emergence, as well as development on net prior AY catastrophe losses within P&C, and $1.0 million of strengthening within Marine due to loss development. This reserve strengthening was partially offset by $3.0 million of net prior AY reserve release within our Surety product due to favorable loss emergence.

For the three months ended March 31, 2019, our Losses and LAE Payments increased $57.5 million as compared to the same period in 2018, primarily due to increased claim payments associated with growth in our business.

Our March 31, 2019 Net Reserves for Losses and LAE includes estimated amounts for numerous catastrophe events. We caution that the magnitude and complexity of losses arising from these events inherently increases the level of uncertainty and therefore the level of management judgment involved in arriving at our estimated Net Reserves for Losses and LAE. As a result, our actual losses for these events may ultimately differ materially from our current estimates.  

NOTE 8. CEDED REINSURANCE

As of March 31, 2019, the credit quality distribution of our Company’s reinsurance recoverable of $1.2 billion for ceded paid losses, ceded unpaid losses and LAE, and ceded unearned premiums based on insurer financial strength ratings from A.M. Best or S&P was not significantly different from the credit quality distribution as of December 31, 2018.

Our allowance for uncollectible reinsurance was $13.4 million as of March 31, 2019 and December 31, 2018.

As of March 31, 2019, the list of our 10 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and LAE and ceded unearned premium, together with the reinsurance recoverable and collateral, was similar to the list as of December 31, 2018.

NOTE 9. LEASES

The Company enters into lease agreements for real estate which is primarily used for office facilities in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. See Note 1 Organization & Summary of Significant Accounting Policies for additional information regarding the accounting for leases.

Certain of our European operating real estate leases contain variable lease payments which are based on indexes of the respective countries. Most leases include an option to extend or renew the lease term. The exercise of the renewal option is at our discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if we are reasonably certain of exercising those options. In determining the present value of lease payments, we utilize the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

20

Rent expense is included in Other Operating Expenses in the Consolidated Statement of Income (Loss). Additional information regarding the Company’s real estate operating leases is as follows:

amounts in thousands	Three Months Ended March 31, 2019
Lease cost
Operating leases	$	2,121
Variable leases		2
Total lease cost	$	2,123
Other information on operating leases
Cash payments included in the measurement of lease liabilities reported in operating cash flows	$	2,459
Weighted average discount rate		2.97	%
Weighted average remaining lease term in years	7.2 years

The following table presents the contractual maturities of the Company's lease liabilities:

amounts in thousands	Real Estate Lease Liability
Remainder of 2019	$	7,480
2020		9,818
2021		8,985
2022		8,090
2023		7,344
Thereafter		15,869
Total undiscounted lease base rent payments		57,586
Less: present value adjustment		3,970
Operating lease liability	$	53,616

NOTE 10. COMMITMENTS AND CONTINGENCIES

In 2013, the State of Connecticut (“the State”) awarded our Company up to $11.5 million ($8.0 million in loans and $3.5 million in grants) to move our corporate headquarters to Stamford, Connecticut. The loan is non-interest bearing, has a term of 10 years and is subject to forgiveness based on our compliance with certain conditions set forth in the agreement with the State. The amount of the loan to be received and forgiven is dependent on our Company reaching certain milestones for creation and retention of new jobs over a five-year period, and the funds are to be used to offset certain equipment purchases, facility costs, training of employees and other eligible project-related costs. As of March 31, 2019, our Company has received all of the award and earned a loan forgiveness credit of $7.0 million with the State. Our Company is recognizing the amount of loan and grants received over the period in which offsetting expenses are recognized. Our Company recognized $0.3 million and $0.4 million of the incentive for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019 and December 31, 2018, our Company has deferred revenue of $4.4 million and $4.7 million, respectively, which is included in Other Liabilities on the Consolidated Balance Sheets.

On February 16, 2017, our Company entered into a guarantee, pursuant to which it guaranteed all of the liabilities and obligations of NIIC (the “Guarantee”). The Guarantee will remain effective until all of such liabilities and obligations are discharged, and in the event that our Company does not meet its obligations under the Guarantee, any person who is covered by an insurance policy, certificate of coverage or reinsurance contract issued by NIIC will be a third party beneficiary under the Guarantee. Our Company’s obligations under the Guarantee may be terminated by providing twelve months prior written notice to NIIC. However the obligations of our Company under the Guarantee terminate immediately in the event that (i) the majority of the outstanding voting capital stock in NIIC is sold to any non-affiliated entity; (ii) A.M. Best has confirmed that NIIC will receive the same financial strength rating as NIC or NSIC, without the benefit of the Guarantee; or (iii) NIIC withdraws its request to be rated by A.M. Best, provided that NIIC has not been downgraded within the prior twelve months.

On August 22, 2018, our Company entered into a Merger Agreement with The Hartford. In accordance with the terms of the Merger Agreement, our Company would be obligated to pay The Hartford a $68.25 million termination fee if the Merger Agreement is terminated for certain reasons outlined in the Merger Agreement.

21

In the ordinary course of conducting business, our Parent Company’s subsidiaries are involved in various legal proceedings. Most of these proceedings consist of claims litigation involving our Parent 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. In general, our Company believes we have valid defenses to these cases. Our Company’s management believes that the ultimate liability, if any, with respect to these legal proceedings, after consideration of provisions made for potential losses and cost of defense, will not be material to our Company’s Consolidated Balance Sheets, Statements of Income and Statements of Cash Flows.

NOTE 11. STOCK-BASED COMPENSATION

Stock-based compensation granted under our Company’s stock plans is expensed in tranches over the vesting period. Non-performance based grants of restricted stock units generally vest equally over a three or four-year period. Performance units generally cliff vest three years after they are granted. During the first quarter of 2019, awards were granted as restricted stock units which cliff vest three years after the grant date.

Each performance unit and restricted stock unit represents a contingent right to receive one share of Common Stock as of the vesting date. Such Common Stock may be subject to forfeiture for the payment of any required tax withholding.

The activity related to our Company's restricted stock unit awards was as follows:

	Three Months Ended March 31, 2019
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		86,589		$	49.45
Granted		191,713			69.76
Vested (2)		(14,849	)		46.51
Forfeited		(8,250	)		48.74
Nonvested at the end of the period		255,203		$	64.90

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the three months ended March 31, 2019 share awards of 6,043 were withheld for tax payments at a weighted average vest date fair value of $69.62.

Restricted stock unit awards that remain outstanding at the time of the Merger will be treated as follows in accordance with the Merger Agreement:

Each tranche of the restricted stock unit awards that remains outstanding at the time of the Merger that are scheduled to vest prior to January 1, 2020 will be converted into a right to receive an amount in cash equal to the product of (a) the Merger Consideration multiplied by (b) the number of restricted stock unit in the applicable tranche, and will vest upon the Merger.

Each tranche of the restricted stock unit awards that remains outstanding at the time of the Merger that are scheduled to vest on or after January 1, 2020 and was granted prior to January 1, 2019 will be cancelled and converted into a right to receive an amount in cash equal to the product of (a) the Merger Consideration multiplied by (b) the number of restricted stock units in the applicable tranche, and will vest pursuant to the existing vesting schedule.

Each tranche of the restricted stock unit awards that remains outstanding at the time of the Merger that was granted on or after January 1, 2019 will be cancelled and converted into the right to receive a number of restricted stock units issued by The Hartford equal to (a) the Merger Consideration multiplied by the number of restricted stock units in the applicable tranche, divided by (b) the closing price of a share of The Hartford common stock on the business day immediately prior to the Merger, and will vest pursuant to the existing vesting schedule.

22

The activity related to our Company's performance-based equity awards was as follows:

	Three Months Ended March 31, 2019
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		845,533		$	48.86
Granted		—			—
Performance Adjustment		(96,448	)		40.57
Vested (2)		(247,448	)		40.70
Forfeited		(27,000	)		51.27
Nonvested at the end of the period		474,637		$	54.66

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the three months ended March 31, 2019 share awards of 98,558 were withheld for tax payments at a weighted average vest date fair value of $69.78.

Performance unit awards that remain outstanding at the time of the Merger will be treated as follows in accordance with the Merger Agreement:

Each performance unit award granted prior to January 1, 2017 that remains outstanding at the time of the Merger will be converted into a right to receive an amount in cash equal to the product of (a) the Merger Consideration multiplied by (b) the target performance units granted and will vest upon the Merger.

Each performance unit award granted on or after January 1, 2017 and prior to January 1, 2019 that remains outstanding at the time of the Merger will be cancelled and converted into a right to receive an amount in cash equal to the product of (a) the Merger Consideration multiplied by (b) the target performance units granted, and will vest pursuant to the existing vesting schedule.

NOTE 12. STOCKHOLDERS’ EQUITY

On February 14, 2019 our Board of Directors declared a cash dividend of $0.07 per share that was paid on March 11, 2019. During the three months ended March 31, 2018, a dividend of $0.07 per share was declared and paid.

NOTE 13. SUBSEQUENT EVENTS

Merger

The Merger Agreement provides for the automatic extension of the outside date from May 1, 2019 to July 1, 2019 to allow the parties additional time to satisfy a mutual condition to closing relating to the receipt of all required regulatory approvals. As of May 1, 2019, the completion of the Merger remained subject to the approval of the New York State Department of Financial Services (the “NYDFS”) and the automatic extension has been triggered. The Company and The Hartford continue to pursue a timely approval of the change in control application with the NYDFS in order to complete the Merger as promptly as possible.

Income Taxes

Subsequent to March 31, 2019, the Company entered into an agreement to settle an uncertain tax position with the Internal Revenue Service related to foreign tax credits for years 2014, 2015 and 2016. The settlement resulted in a decrease to unrecognized tax benefits of $6.4 million.

Cash Dividend Declared

On May 9, 2019, our Board of Directors declared a cash dividend on our Company’s Common Stock of $0.07 per share, payable on June 4, 2019 to stockholders of record on May 20, 2019.

23

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

FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report on Form 10-Q 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,” “may,” “will,” “intend,” “continue” 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. Factors that could cause actual results to differ materially from our forward-looking statements include, but are not limited to, the factors described in Part I, Item 1A, Risk Factors section in our 2018 Annual Report on Form 10-K and Part II, Item 1A, Risk Factors included in this Form 10-Q. Due to these known risks, any unknown risks, uncertainties and assumptions, forward-looking statements discussed in this report may not occur and actual results may differ materially, and you are therefore cautioned not to place undue reliance on them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

U.S. GAAP and Non-GAAP Financial Performance Metrics

Throughout this Quarterly Report, we present our operations in the way we believe will be most meaningful, useful and transparent to anyone using this financial information to evaluate our performance. In addition to the presentation of Net Income (Loss), Book Value, Book Value per Share, Net Losses and LAE Reserves and Combined Ratio, we show certain non-GAAP financial measures as defined in Regulation G that we believe are valuable in managing our business and drawing comparisons to our peers. These non-GAAP measures are Net Operating Earnings (Loss) and Underwriting Profit (Loss).

The following is a list of GAAP and non-GAAP measures found throughout this report with their definitions, relationships to GAAP measures and explanations of their importance to our operations:

Book Value and Book Value Per Share

Book Value is equivalent to Stockholders’ Equity and Book Value per Share is calculated by dividing Stockholders’ Equity by the number of outstanding shares at the end of the interim period.

Net Losses and LAE Reserves

Reserves for Losses and LAE, as shown in the liabilities section of our Consolidated Balance Sheets, represents the total gross obligations to claimants for both estimates of known claims and estimates for IBNR claims. The related asset item, Reinsurance Recoverable on Unpaid Losses and LAE, is the estimate of both known claims and IBNR that we expect to recover from reinsurers. The net of these two items is generally referred to as Net Losses and LAE Reserves and is commonly used in our disclosures regarding the process of establishing these various estimated amounts.

Combined Ratio

The Combined Ratio is a common insurance industry measure of profitability for any underwriting operation and is calculated in three components. First, the Loss Ratio is represented by Net Losses and LAE divided by Net Earned Premiums. The second component is the Commission Expense Ratio, which is Commission Expenses divided by Net Earned Premiums. The third component is the Other Operating Expense Ratio, which reflects the sum of Other Operating Expenses and Other Underwriting Income (Expense), divided by Net Earned Premiums. All items included in these components of the Combined Ratio are presented in our GAAP Consolidated Financial Statements. The sum of the Loss, Commission Expense and Other Operating Expense Ratios is the Combined Ratio. The difference between the Combined Ratio and 100% reflects the rate of Underwriting Profit (Loss). For example, a Combined Ratio of 85% implies that for every $100 of premium we earn, we record $15 of Underwriting Profit.

Net Operating Earnings (Loss)

Net Operating Earnings (Loss) is a “non-GAAP financial measure” as defined in Regulation G. Net Operating Earnings (Loss) is comprised of Net Income (Loss) excluding After-Tax adjustments, including: Total Net Realized and Unrealized Gains (Losses), Foreign Exchange Gains (Losses), the Net Gain on Disposition of Product Line, and Merger Transaction Costs recognized in our Consolidated Statements of Income (Loss). We believe that this presentation reflects the underlying fundamentals of our business.

24

A reconciliation of Net Income (Loss) (the nearest GAAP financial measure) to Net Operating Earnings (Loss) can be found in Item 2, Results of Operations. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our business and enables investors and other users of our financial information to analyze underlying business performance in a manner similar to management. We also believe this measure follows industry practice and, therefore facilitates comparison of our performance with our peer group.

Underwriting Profit (Loss)

Underwriting Profit (Loss) represents one measure of the pre-tax profitability of our insurance operations and is derived by subtracting the following from Net Earned Premiums: Net Losses and LAE Incurred, Commission Expenses, Other Operating Expenses and Other Underwriting Income (Expense). This information is available in total and by segment in Note 3 Segment Information in the Interim Consolidated Financial Statements. The nearest comparable GAAP measure is Income (Loss) Before Income Taxes which, in addition to Net Underwriting Profit (Loss), includes Net Investment Income, Total Net Realized and Unrealized Gains (Losses) recognized in our Consolidated Statements of Income (Loss), Interest Expense, Other Income (Loss), and Merger Transaction Costs. While this measure is presented in the footnotes to the Interim Consolidated Financial Statements, it is considered a “non-GAAP financial measure” as defined in Regulation G when presented elsewhere on a consolidated basis.

A reconciliation of total Net Underwriting Profit (Loss) and its components to Income (Loss) Before Income Taxes (the nearest GAAP financial measure) can be found in Item 1, Note 3 Segment Information to the Interim Consolidated Financial Statements and in Item 2, Segment Results. We believe that presentation of Net Underwriting Profit (Loss) provides investors with an enhanced understanding of our results of operations, by highlighting the underlying pre-tax profitability of our underwriting activities.

Overview

The discussion and analysis of our financial condition and results of operations contained herein should be read in conjunction with our 2018 Annual Report on Form 10-K in its entirety as well as the statements under “Forward-Looking Statements” and the Interim Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for a complete description of events, trends, uncertainties, risks and critical accounting estimates affecting us.

Unless the context requires otherwise, the terms “we,” “us,” “our” or “our Company” are used to mean The Navigators Group, Inc., a Delaware holding company established in 1982, and its subsidiaries. The term “Parent Company” is used to mean The Navigators Group, Inc. without its subsidiaries.

We are an international insurance company with a long-standing area of specialization in Marine insurance. We also offer P&C insurance, primarily general liability coverage and umbrella & excess liability coverage to commercial enterprises through our Primary and Excess Casualty divisions. We have also developed niches in Professional Liability insurance, through our D&O and E&O divisions, as well as assumed reinsurance products.

During the second quarter of 2018, our Company established a wholly owned subsidiary, Navigators Holding (Europe) NV, which on June 7, 2018 (the “acquisition date”), acquired a 100% ownership interest in Bracht, Deckers & Mackelbert NV, an insurance underwriting agency organized under the laws of Belgium (“BDM”), Assurances Continentales – Continentale Verzekeringen NV, an insurance company licensed under the laws of Belgium (“ASCO”), and a wholly-owned subsidiary of ASCO, Canal Re S.A., a reinsurance company licensed under the laws of the Grand Duchy of Luxembourg (“Canal Re”). This group of three companies will be referred to as the “Navigators Insurance Companies of Europe Group” or “NICE Group.”

On August 22, 2018, our Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Hartford Financial Services Group, Inc. (“The Hartford”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of the Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford (the “Merger”). Pursuant to the Merger Agreement, at the effective time of the Merger, holders of the Company’s common shares will be entitled to receive consideration of $70.00 in cash per common share. The Merger Agreement provides for the automatic extension of the outside date from May 1, 2019 to July 1, 2019 to allow the parties additional time to satisfy a mutual condition to closing relating to the receipt of all required regulatory approvals. As of May 1, 2019, the completion of the Merger remained subject to the approval of the New York State Department of Financial Services (the “NYDFS”) and the automatic extension has been triggered. The Company and The Hartford continue to pursue a timely approval of the change in control application with the NYDFS in order to complete the Merger as promptly as possible.

25

Financial Highlights – Selected Indicators

	Three Months Ended
amounts in thousands, except per share amounts	March 31, 2019			March 31, 2018
Results of Operations Data:
Net Earned Premiums	$	377,189		$	322,627
Net Investment Income		28,219			23,702
Underwriting Profit (Loss)		(43,512	)		19,407
Net Income (Loss)		(1,738	)		30,878
Net Income (Loss) per Diluted Share	$	(0.06	)	$	1.02
Net Cash provided by Operating Activities	$	30,900		$	35,763

amounts in thousands, except per share amounts	As of March 31, 2019		As of December 31, 2018
Balance Sheet Data:
Total Assets	$	5,856,283	$	5,603,449
Total Shareholders' Equity	$	1,230,383	$	1,186,850
Book Value per Share	$	41.05	$	39.85

Our revenue is primarily comprised of premiums and investment income. Cash flow is generated from premiums collected and investment income received less paid losses and loss expenses, commission and administrative expenses as well as the timing of reinsurance receipts and payments. Our products are distributed through multiple channels, utilizing global, national and regional retail and wholesale insurance brokers.

We report our results of operations consistent with the manner in which our Chief Operating Decision Maker reviews the business to assess performance of our four reportable segments: U.S. Insurance, Int’l Insurance, GlobalRe and Corporate.

26

Results of Operations

The following table presents a summary of our consolidated financial results for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,						%Change
amounts in thousands, except per share amounts	2019			2018			QTD
Gross Written Premiums	$	580,976		$	495,224			17.3	%
Ceded Written Premiums		(119,309	)		(101,962	)		17.0	%
Net Written Premiums		461,667			393,262			17.4	%
Net Earned Premiums		377,189			322,627			16.9	%
Net Losses and LAE		(270,352	)		(186,145	)		45.2	%
Commission Expenses		(67,716	)		(54,152	)		25.0	%
Other Operating Expenses		(83,756	)		(62,926	)		33.1	%
Other Underwriting Income		1,123			3		NM
Underwriting Profit (Loss)	$	(43,512	)	$	19,407		NM
Net Investment Income		28,219			23,702			19.1	%
Total Net Realized and Unrealized Gains (Losses)		27,162			(2,012	)	NM
Interest Expense		(3,867	)		(3,864	)		0.1	%
Other Loss		(5,395	)		(120	)	NM
Merger Transaction Costs		(850	)		—		NM
Income Before Income Taxes	$	1,757		$	37,113			(95.3	%)
Income Tax Expense		(3,495	)		(6,235	)		(44.0	%)
Net Income (Loss)	$	(1,738	)	$	30,878		NM
Net Income (Loss) per Basic Share	$	(0.06	)	$	1.04
Net Income (Loss) per Diluted Share	$	(0.06	)	$	1.02
Effective Tax Rate		198.9	%		16.8	%
Losses and LAE Ratio		71.7	%		57.7	%
Commission Expense Ratio		18.0	%		16.8	%
Other Operating Expense Ratio (1)		21.8	%		19.5	%
Combined Ratio		111.5	%		94.0	%

(1) - Includes Other Operating Expenses and Other Underwriting Income.

NM - Percentage change not meaningful

27

The following tables calculate our Net Operating Earnings (Loss) for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31, 2019									Three Months Ended March 31, 2018									% Change
amounts in thousands, except per share amounts	Pre-Tax			Tax (1)			After-Tax			Pre-Tax			Tax (1)			After-Tax			QTD
Net Income (Loss)	$	1,757		$	(3,495	)	$	(1,738	)	$	37,113		$	(6,235	)	$	30,878		NM
Adjustments to Net Income (Loss):
Total Net Realized and Unrealized Gains		(27,162	)		5,704			(21,458	)		2,012			(422	)		1,590		NM
FX Losses (Gains)		6,339			(1,331	)		5,008			1,522			(320	)		1,202		NM
Net Gain on Disposition of Product Line		—			—			—			(948	)		199			(749	)
Merger Transaction Costs		850			(164	)		686			—			—			—		NM
Net Operating Earnings (Loss)	$	(18,216	)	$	714		$	(17,502	)	$	39,699		$	(6,778	)	$	32,921		NM
Average Common Shares Outstanding:
Basic								29,871									29,595
Diluted								29,871									30,137
Net Operating Earnings (Loss) per Common Share:
Basic							$	(0.59	)							$	1.11
Diluted							$	(0.59	)							$	1.09

(1) - Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of any other relevant factors.

NM - Percentage change not meaningful.

Underwriting Profit (Loss)

Our Company reported an Underwriting Loss of $43.5 million for the three months ended March 31, 2019, compared to an Underwriting Profit of $19.4 million for the three months ended March 31, 2018.

The decrease from an Underwriting Profit to an Underwriting Loss was significantly impacted by a $50.4 million increase in Net Prior Accident Year Reserve Strengthening over prior year, primarily related to an increase in our IBNR provision for run-off business for accident years prior to 1988 within the U.S. Marine operating segment and large loss activity within our Int’l Professional Liability operating segment in the current period. Additionally, the Underwriting Loss was impacted by an increase in Other Operating Expenses primarily due to increased headcount, incentive compensation, severance costs and professional fees related to certain finance transformation initiatives as well as an increase in the Commission Expense Ratio primarily driven by the Int’l Insurance reporting segment. Partially offsetting these decreases to Underwriting Profit compared to the prior period was the impact of growth in Net Earned Premiums across all of our reporting segments.

For more detail on Underwriting Profit (Loss), see the U.S. Insurance, Int’l Insurance and GlobalRe reporting segment results sections included herein.

A major component of our Underwriting Profit (Loss) is Net Losses and LAE. The following table presents the current and prior accident year (“AY”) changes in our Net Losses and LAE Ratio for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,						Point
	2019			2018			Change
Net Losses and LAE Ratio		71.7	%		57.7	%		14.0
Net Prior AY Reserve (Release)/Strengthening		13.9	%		0.6	%		13.3
Net Current AY Losses and LAE Ratio		57.8	%		57.1	%		0.7

For the three months ended March 31, 2019, our Reported Net Losses and LAE Ratio increased 14.0 points as compared to the same period in 2018 driven by:

28

Prior Year Reserve Development

For the three months ended March 31, 2019, our Net Prior AY Losses and LAE Ratio increased 13.3 points as compared to the same period in 2018 driven by $52.3 million of Net Prior AY Reserve Strengthening, primarily attributable to an increase in our IBNR provision for run-off business for accident years prior to 1988 within our U.S. Marine operating segment and large loss activity within our Int’l Professional Liability operating segment.

Changes in the Current Accident Year Loss Ratio

For the three months ended March 31, 2019, our Net Current AY Losses and LAE Ratio increased 0.7 points as compared to the same period in 2018 primarily driven by net catastrophe losses related to the Russian River Flood in California impacting our Int’l Insurance reporting segment during the first quarter of 2019.

Net Investment Income

Our Net Investment Income was derived from the following sources:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Fixed Maturities	$	25,015		$	21,052
Equity Securities		3,155			2,925
Short-Term Investments, Cash & Cash Equivalents		570			227
Other Invested Assets		228			186
Total Investment Income	$	28,968		$	24,390
Investment Expenses		(749	)		(688	)
Net Investment Income	$	28,219		$	23,702

The increase in Net Investment Income for the three months ended March 31, 2019 as compared to the same period in the prior year was due to an increase in yields and growth of invested assets in the Fixed Maturities portfolio. The annualized pre-tax yield, excluding Total Net Realized and Unrealized Gains and Losses recognized in our Results of Operations, for the three months ended March 31, 2019 was 3.0% compared to 2.7% for the same period in 2018.

As part of our overall investment strategy, we seek to build a tax efficient investment portfolio by maintaining an allocation of tax- exempt municipal bonds. The tax-exempt portion of our Fixed Maturities portfolio was 17.9% at March 31, 2019 as compared to 19.7% at March 31, 2018. Additionally, 86.2% and 94.3% of our equity portfolio is invested in tax efficient securities at March 31, 2019 and 2018, respectively, which qualify for the dividends received deduction. The tax equivalent yield for the three months ended March 31, 2019 and 2018 was 3.1% and 2.9%, respectively.

OTTI Losses Recognized in Earnings

Our Company had no credit related OTTI losses during the three months ended March 31, 2019 and 2018.

29

Net Realized Gains and Losses on Investments Sold

Net Realized Gains and Losses on Investments Sold, excluding OTTI Losses Recognized in Earnings, for the periods indicated were as follows:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Fixed Maturities:
Gains	$	784		$	1,806
Losses		(265	)		(275	)
Fixed Maturities, Net	$	519		$	1,531
Short-Term Investments, Cash & Cash Equivalents:
Gains	$	—		$	18
Losses		(17	)		(174	)
Short-Term, Net	$	(17	)	$	(156	)
Other Invested Assets:
Gains	$	134		$	50
Losses		—			(41	)
Other Invested Assets, Net	$	134		$	9
Equity Securities:
Gains	$	3		$	—
Losses		(246	)		(215	)
Equity Securities, Net	$	(243	)	$	(215	)
Net Realized Gains on Investments Sold	$	393		$	1,169

Net Realized Gains and Losses are generated as part of the normal ongoing management of our investment portfolio. Net Realized Gains of $0.4 million for the three months ended March 31, 2019 are primarily due to the sale of Municipal Bonds and Corporate Exposures, partially offset by realized losses from the sale of preferred stock. Net realized gains of $1.2 million for the three months ended March 31, 2018 are primarily due to the sale of Corporate Exposures.

Net Unrealized Gains and Losses on Investments at Fair Value through Net Income

For the three months ended March 31, 2019 our Company had $26.8 million of net unrealized gains on our Equity Securities.  For the three months ended March 31, 2018 our Company had $3.2 million of net unrealized losses on our Equity Securities.

Interest Expense

Interest Expense was $3.9 million for the three months ended March 31, 2019 and 2018, relating to our $265.0 million principal amount of the Senior Notes. The effective interest rate related to the Senior Notes, based on the proceeds net of discount and all issuance costs, is approximately 5.86%.

Other Loss

Other Loss for the three months ended March 31, 2019 was $(5.4) million compared to $(0.1) million for the same period in 2018. The loss for the three months ended March 31, 2019 was attributable to net realized and unrealized foreign exchange losses driven by the re-measurement of net insurance related liabilities primarily impacted by the weakening of the U.S. Dollar against the Great British pound. The loss for the three months ended March 31, 2018 included revenue from the sale of renewal rights for our Company’s fixed-premium protection and indemnity business, offset by net realized and unrealized foreign exchange losses.

Merger Transaction Costs

Merger Transaction Costs for the three months ended March 31, 2019 were $0.9 million. These costs represent expenses incurred that are associated with the Merger and are unrelated to our ongoing operations.

30

Income Taxes

We recorded an Effective Tax Rate of 198.9% for the three months ended March 31, 2019 compared to 16.8% for the same period in 2018. The increase of 182.1 points for the three months ended March 31, 2019 is mainly the result of an increase in the valuation allowance against our Continental European business. The rate impact of the valuation allowance was amplified by the low net pretax income, resulting in the high tax rate.

Segment Results

The following tables summarize our Consolidated Financial Results by reporting segment for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31, 2019
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross Written Premiums	$	291,967		$	156,129		$	132,880		$	—		$	580,976
Ceded Written Premiums		(73,795	)		(37,731	)		(7,783	)		—			(119,309	)
Net Written Premiums	$	218,172		$	118,398		$	125,097		$	—		$	461,667
Retention Ratio		74.7	%		75.8	%		94.1	%		—			79.5	%
Net Earned Premiums	$	202,037		$	108,913		$	66,239		$	—		$	377,189
Net Losses and LAE		(151,125	)		(75,458	)		(43,769	)		—			(270,352	)
Commission Expenses		(24,786	)		(26,447	)		(16,433	)		(50	)		(67,716	)
Other Operating Expenses		(43,210	)		(32,422	)		(8,124	)		—			(83,756	)
Other Underwriting Income (Expense)		95			1,034			(56	)		50			1,123
Underwriting Loss	$	(16,989	)	$	(24,380	)	$	(2,143	)	$	—		$	(43,512	)
Net Investment Income											28,219			28,219
Total Net Realized and Unrealized Gains											27,162			27,162
Interest Expense											(3,867	)		(3,867	)
Other Loss											(5,395	)		(5,395	)
Merger Transaction Costs											(850	)		(850	)
Income (Loss) Before Income Taxes	$	(16,989	)	$	(24,380	)	$	(2,143	)	$	45,269		$	1,757
Income Tax Expense											(3,495	)		(3,495	)
Net Loss													$	(1,738	)
Losses and LAE Ratio		74.8	%		69.3	%		66.1	%					71.7	%
Commission Expense Ratio		12.3	%		24.3	%		24.8	%					18.0	%
Other Operating Expense Ratio (2)		21.3	%		28.8	%		12.3	%					21.8	%
Combined Ratio		108.4	%		122.4	%		103.2	%					111.5	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

31

	Three Months Ended March 31, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross Written Premiums	$	239,928		$	127,872		$	127,424		$	—		$	495,224
Ceded Written Premiums		(66,581	)		(28,888	)		(6,493	)		—			(101,962	)
Net Written Premiums	$	173,347		$	98,984		$	120,931		$	—		$	393,262
Retention Ratio		72.2	%		77.4	%		94.9	%		—			79.4	%
Net Earned Premiums	$	172,913		$	93,210		$	56,504		$	—		$	322,627
Net Losses and LAE		(110,422	)		(45,843	)		(29,880	)		—			(186,145	)
Commission Expenses		(20,861	)		(19,756	)		(13,768	)		233			(54,152	)
Other Operating Expenses		(36,991	)		(20,530	)		(5,405	)		—			(62,926	)
Other Underwriting Income (Expense)		98			—			138			(233	)		3
Underwriting Profit		4,737			7,081			7,589		$	—			19,407
Net Investment Income											23,702			23,702
Total Net Realized and Unrealized Losses											(2,012	)		(2,012	)
Interest Expense											(3,864	)		(3,864	)
Other Loss											(120	)		(120	)
Income Before Income Taxes	$	4,737		$	7,081		$	7,589		$	17,706		$	37,113
Income Tax Expense											(6,235	)		(6,235	)
Net Income													$	30,878
Losses and LAE Ratio		63.9	%		49.2	%		52.9	%					57.7	%
Commission Expense Ratio		12.1	%		21.2	%		24.4	%					16.8	%
Other Operating Expense Ratio (2)		21.3	%		22.0	%		9.3	%					19.5	%
Combined Ratio		97.3	%		92.4	%		86.6	%					94.0	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

U.S. Insurance

The following tables summarize our Underwriting Profit (Loss) by operating segment for our U.S. Insurance reporting segment for the three months ended March 31, 2019 and 2018:

	U.S. Insurance
	Three Months Ended March 31, 2019
amounts in thousands	Marine			P&C			Professional Liability			Total			Change 2019 vs. 2018
Gross Written Premiums	$	47,801		$	207,802		$	36,364		$	291,967			21.7	%
Ceded Written Premiums		(15,077	)		(53,544	)		(5,174	)		(73,795	)		10.8	%
Net Written Premiums	$	32,724		$	154,258		$	31,190		$	218,172			25.9	%
Retention Ratio		68.5	%		74.2	%		85.8	%		74.7	%		2.5
Net Earned Premiums	$	23,357		$	151,171		$	27,509		$	202,037			16.8	%
Net Losses and LAE		(36,852	)		(95,589	)		(18,684	)		(151,125	)		36.9	%
Commission Expenses		(1,872	)		(17,895	)		(5,019	)		(24,786	)		18.8	%
Other Operating Expenses		(7,883	)		(29,610	)		(5,717	)		(43,210	)		16.8	%
Other Underwriting Income		3			90			2			95			(3.1	%)
Underwriting Profit (Loss)	$	(23,247	)	$	8,167		$	(1,909	)	$	(16,989	)	NM
Losses and LAE Ratio		157.8	%		63.2	%		67.9	%		74.8	%
Commission Expense Ratio		8.0	%		11.8	%		18.2	%		12.3	%
Other Operating Expense Ratio (1)		33.7	%		19.6	%		20.8	%		21.3	%
Combined Ratio		199.5	%		94.6	%		106.9	%		108.4	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

NM - Percentage change not meaningful

32

	U.S. Insurance
	Three Months Ended March 31, 2018
amounts in thousands	Marine			P&C			Professional Liability			Total
Gross Written Premiums	$	41,724		$	168,193		$	30,011		$	239,928
Ceded Written Premiums		(17,480	)		(44,912	)		(4,189	)		(66,581	)
Net Written Premiums	$	24,244		$	123,281		$	25,822		$	173,347
Retention Ratio		58.1	%		73.3	%		86.0	%		72.2	%
Net Earned Premiums	$	21,092		$	127,590		$	24,231		$	172,913
Net Losses and LAE		(15,752	)		(80,918	)		(13,752	)		(110,422	)
Commission Expenses		(1,408	)		(15,167	)		(4,286	)		(20,861	)
Other Operating Expenses		(6,275	)		(25,624	)		(5,092	)		(36,991	)
Other Underwriting Income		77			15			6			98
Underwriting Profit (Loss)	$	(2,266	)	$	5,896		$	1,107		$	4,737
Losses and LAE Ratio		74.7	%		63.4	%		56.8	%		63.9	%
Commission Expense Ratio		6.7	%		11.9	%		17.7	%		12.1	%
Other Operating Expense Ratio (1)		29.3	%		20.1	%		20.9	%		21.3	%
Combined Ratio		110.7	%		95.4	%		95.4	%		97.3	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

Gross Written Premiums

Gross Written Premiums increased $52.0 million for the three months ended March 31, 2019 as compared to the same period in 2018, driven by a $39.6 million, $6.4 million and $6.1 million increase in our P&C, Professional Liability and Marine operating segments, respectively.

The increase in our Marine operating segment was primarily driven by increases in our Cargo and Marine Liability products due to timing of renewals as well as new business within Cargo due to the launch of new initiatives, partially offset by a decrease in average renewal premium rates.

The increase in our P&C segment was primarily due to increases in our Excess Casualty, Auto, Primary Casualty and Environmental divisions, partially offset by a decrease in our Property and Life Sciences divisions. Our Excess Casualty division increased $29.9 million primarily due to new business production within the construction market, as well as new opportunities driven by changes in competition. Our Auto, Primary Casualty and Environmental divisions increased due to new business production, and to a lesser extent, an increased level of renewals. This was partially offset by decreases within our Property and Life Sciences divisions due to changes in our underwriting strategy.

The increase in our Professional Liability segment was due to increased level of renewals, new business and improved rates.

Average renewal premium rates for our U.S. Insurance reporting segment for the three months ended March 31, 2019 increased 2.0% compared to the same period in 2018, driven by increases of 3.1% and 2.0% within our P&C and Professional Liability operating segments, respectively, partially offset by a decrease of (0.6)% within our Marine operating segment.

Ceded Written Premiums

For the three months ended March 31, 2019, Ceded Written Premiums were $73.8 million, resulting in a retention ratio of 74.7% of Net Written Premiums to Gross Written Premiums. This compares to $66.6 million for the same period in 2018, resulting in a retention ratio of 72.2%. The increase in the retention ratio was primarily driven by our Marine operating segment, combined with an increase for the P&C operating segment, partially offset by a decrease in our Professional Liability operating segment.

The increase in our Marine operating segment’s retention ratio was primarily driven by a reduction in proportional reinsurance across various products, including reduced cessions and non-renewals of certain reinsurance treaties.

The increase in our P&C operating segment’s retention ratio was primarily due to changes in the mix of business.

The decrease in our Professional Liability operating segment’s retention ratio was primarily attributable to mix of business.

33

Net Earned Premiums

Net Earned Premiums increased $29.1 million for the three months ended March 31, 2019, as compared to the same period in 2018, mainly due to Gross Written Premium growth in our P&C, Professional Liability and Marine operating segments, and to a lesser extent, the impact of reducing our proportional reinsurance coverage.  

Net Losses and LAE

The Net Losses and LAE reserves as of March 31, 2019 and December 31, 2018 were as follows:

	U.S. Insurance
	As of March 31, 2019								As of December 31, 2018
amounts in thousands	Marine		P&C		Professional Liability		Total		Marine		P&C		Professional Liability		Total		Total % Change
Case Reserves	$	57,126	$	210,514	$	33,582	$	301,222	$	52,362	$	218,795	$	36,564	$	307,721		(2.1	%)
IBNR Reserves		65,885		822,620		98,534		987,039		49,611		799,117		98,257		946,985		4.2	%
Total	$	123,011	$	1,033,134	$	132,116	$	1,288,261	$	101,973	$	1,017,912	$	134,821	$	1,254,706		2.7	%

The following tables present the current and prior accident year changes in our Net Losses and LAE Ratio for the three months ended March 31, 2019 and 2018:

	U.S. Insurance
	Three Months Ended March 31, 2019												Three Months Ended March 31, 2018
							Professional												Professional						Point
	Marine			P&C			Liability			Total			Marine			P&C			Liability			Total			Change
Net Losses and LAE Ratio		157.8	%		63.2	%		67.9	%		74.8	%		74.7	%		63.4	%		56.8	%		63.9	%		10.9
Net Prior AY Reserve    (Release)/Strengthening		100.3	%		0.7	%		8.0	%		13.2	%		15.7	%		1.2	%		(0.1	%)		2.8	%		10.4
Net Current AY Losses and    LAE Ratio		57.5	%		62.5	%		59.9	%		61.6	%		59.0	%		62.2	%		56.9	%		61.1	%		0.5

For the three months ended March 31, 2019, our Net Losses and LAE Ratio increased 10.9 points as compared to the same period in 2018 driven by:

Prior Year Reserve Development

For the three months ended March 31, 2019, our Net Prior AY Losses and LAE Ratio increased 10.4 points as compared to the same period in 2018 driven by:

• Our Marine operating segment recognized $23.4 million of Net Prior AY Reserve Strengthening, primarily due to strengthening of our IBNR provision on run-off business for accident years prior to 1988 within our Marine Liability product line and unfavorable loss emergence in our Cargo and Craft products. This compares to $3.3 million of Net Prior AY Strengthening for the same period in 2018 due to worse than expected loss emergence on our Craft and Fishing Vessel products and catastrophe loss development related to the Hurricane events that occurred during the third quarter of 2017.

• Our Professional Liability operating segment recognized $2.2 million of Net Prior AY Reserve Strengthening primarily due to unfavorable loss emergence within our E&O and Other Professional Liability divisions. This compares to a small net prior AY loss release for the same period in 2018.

The above increase in our Net Prior AY Loss and LAE Ratio was partially offset by:

• Our P&C operating segment recognized $1.0 million of Net Prior AY Reserve Strengthening primarily related to our Primary Casualty division with $3.3 million of loss development, and to a lesser extent, additional strengthening in our Auto and Property divisions, partially offset by Net Prior AY Reserve Releases on our Excess Casualty and Environmental divisions due to better than expected loss emergence. This compares to $1.5 million of Net Prior AY Reserve strengthening for the same period in 2018 primarily related to strengthening of our Property and Other P&C divisions.  

34

Changes in the Current Accident Year Loss Ratio

For the three months ended March 31, 2019, our Net Current AY Losses and LAE Ratio increased 0.5 points as compared to the same period in 2018, primarily driven by increases in our Professional Liability and P&C operating segments due to changes in the mix of business and increases in ultimate loss expectations for certain divisions, partially offset by a decrease in our Marine operating segment related to improved loss expectations.

Commission Expenses

Our Commission Expense Ratio for the three months ended March 31, 2019 increased 0.2 points compared to the same period in 2018, mostly driven by our Professional Liability and Marine operating segments, partially offset by a decrease in our P&C operating segment.

Our Marine operating segment’s Commission Expense Ratio increased due to higher enhanced and direct profit commission expense.

Our P&C operating segment’s Commission Expense Ratio decreased mainly due to mix of business.

Our Professional Liability operating segment’s Commission Expense Ratio increased due to reduced ceding commission income from the proportional reinsurance on our D&O product.

Other Operating Expenses

Other Operating Expenses for the three months ended March 31, 2019 increased $6.2 million, as compared to the same period in 2018, primarily due to higher consulting costs and information technology expenses, as well as greater employee expenses.  

Int’l Insurance

The following tables summarize our Underwriting Profit (Loss) by operating segment for our Int’l Insurance reporting segment for the three months ended March 31, 2019 and 2018: 

	Int'l Insurance
	Three Months Ended March 31, 2019
amounts in thousands	Marine			P&C			Professional Liability			Total			Change 2019 vs. 2018
Gross Written Premiums	$	54,861		$	58,567		$	42,701		$	156,129			22.1	%
Ceded Written Premiums		(11,236	)		(14,037	)		(12,458	)		(37,731	)		30.6	%
Net Written Premiums	$	43,625		$	44,530		$	30,243		$	118,398			19.6	%
Retention Ratio		79.5	%		76.0	%		70.8	%		75.8	%		(1.6	)
Net Earned Premiums	$	35,744		$	36,033		$	37,136		$	108,913			16.8	%
Net Losses and LAE		(22,975	)		(16,653	)		(35,830	)		(75,458	)		64.6	%
Commission Expenses		(7,693	)		(9,026	)		(9,728	)		(26,447	)		33.9	%
Other Operating Expenses		(10,020	)		(13,193	)		(9,209	)		(32,422	)		57.9	%
Other Underwriting Income		616			418			—			1,034		NM
Underwriting Loss	$	(4,328	)	$	(2,421	)	$	(17,631	)	$	(24,380	)	NM
Losses and LAE Ratio		64.3	%		46.2	%		96.5	%		69.3	%
Commission Expense Ratio		21.5	%		25.0	%		26.2	%		24.3	%
Other Operating Expense Ratio (1)		26.3	%		35.5	%		24.8	%		28.8	%
Combined Ratio		112.1	%		106.7	%		147.5	%		122.4	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

NM – Percentage change not meaningful

35

	Int'l Insurance
	Three Months Ended March 31, 2018
amounts in thousands	Marine			P&C			Professional Liability			Total
Gross Written Premiums	$	56,478		$	33,960		$	37,434		$	127,872
Ceded Written Premiums		(8,054	)		(13,667	)		(7,167	)		(28,888	)
Net Written Premiums	$	48,424		$	20,293		$	30,267		$	98,984
Retention Ratio		85.7	%		59.8	%		80.9	%		77.4	%
Net Earned Premiums	$	39,279		$	21,769		$	32,162		$	93,210
Net Losses and LAE		(20,446	)		(9,223	)		(16,174	)		(45,843	)
Commission Expenses		(9,730	)		(2,565	)		(7,461	)		(19,756	)
Other Operating Expenses		(6,810	)		(7,679	)		(6,041	)		(20,530	)
Underwriting Profit	$	2,293		$	2,302		$	2,486		$	7,081
Losses and LAE Ratio		52.1	%		42.4	%		50.3	%		49.2	%
Commission Expense Ratio		24.8	%		11.8	%		23.2	%		21.2	%
Other Operating Expense Ratio		17.3	%		35.2	%		18.8	%		22.0	%
Combined Ratio		94.2	%		89.4	%		92.3	%		92.4	%

Gross Written Premiums

Gross Written Premiums increased $28.3 million for the three months ended March 31, 2019 compared to the same period in 2018, driven by a $24.6 million and $5.3 million increase in our P&C and Professional Liability operating segments, respectively, partially offset by a decrease in our Marine operating segment of $1.6 million.

The decrease in our Marine operating segment was driven by our Cargo, Transport and Hull products, due to non-renewals related to changes in underwriting strategy. These decreases were partially offset by additional premium of $1.3 million from the NICE Group business acquired in the second quarter of 2018.

The increase in our P&C operating segment was driven by additional premium of $14.0 million from the NICE Group business acquired in the second quarter of 2018, as well as an increase in our General Liability division due to new business and rate increases in our Offshore Energy division.

The increase in our Professional Liability operating segment was primarily driven by increased premium estimates in our Warranties and Indemnity product, as well as positive rate improvement in our D&O and E&O divisions.  

Average renewal premium rates for our Int’l Insurance reporting segment for the three months ended March 31, 2019 increased 6.2% compared to the same period in 2018, driven by increases of 11.0%, 5.7% and 5.4% in our Professional Liability, P&C, and Marine operating segments, respectively.

Ceded Written Premiums

Ceded Written Premiums were $37.7 million, resulting in a retention ratio of 75.8% of Net Written Premiums to Gross Written Premiums, for the three months ended March 31, 2019. This compares to Ceded Written Premiums of $28.9 million, resulting in a retention ratio of 77.4%, for the three months ended March 31, 2018. The decrease in the retention ratio was driven by our Marine and Professional Liability operating segments, partially offset by an increase in our P&C operating segment.

The Marine operating segment’s decrease was driven by our Protection & Indemnity division due to our renewal rights agreement with Thomas Miller Specialty in February of 2018 that included a 100% cession of our business, and to a lesser extent, a higher level of facultative reinsurance purchases in our Marine Liability product.  

The P&C operating segment’s increase was primarily attributable to a reduction in quota share reinsurance within our Energy & Engineering division, as well as the impact of additional premium from the NICE Group business acquired in the second quarter of 2018, which carries a lower level of quota share reinsurance.

The Professional Liability operating segment’s decrease was driven by additional excess of loss costs as well as a change in mix of business, with an increase in premiums within our E&O division which carries higher proportional reinsurance.  

36

Net Earned Premiums

Net Earned Premiums increased $15.7 million for the three months ended March 31, 2019, as compared to the same period in 2018. The increase was driven by growth in our P&C and Professional Liability operating segments, partially offset by a decrease in our Marine operating segment.

The decrease in our Marine operating segment’s Net Earned Premium was due to the impact of our renewal rights agreement with Thomas Miller Specialty, as well as greater excess of loss and facultative reinsurance costs within Marine Liability.  These decreases to Net Earned Premiums were partially offset by the impact of additional earned premium from the NICE Group business acquired in the second quarter of 2018.

The increase in our P&C operating segment’s Net Earned Premium was due to growth in most divisions, and additional earned premium from the NICE Group business acquired in the second quarter of 2018. These increases to Net Earned Premiums were partially offset by the runoff of earnings in our Property division, where we took strategic actions to exit our International and North American Property businesses in 2017.

The increase in our Professional Liability operating segment’s Net Earned Premium was driven by growth across all divisions, partially offset by increased excess of loss costs.

Net Losses and LAE

The Net Losses and LAE Reserves as of March 31, 2019 and December 31, 2018 were as follows:

	Int'l Insurance
	As of March 31, 2019								As of December 31, 2018
amounts in thousands	Marine		P&C		Professional Liability		Total		Marine		P&C		Professional Liability		Total		Total% Change
Case Reserves	$	187,520	$	56,131	$	70,850	$	314,501	$	188,911	$	66,202	$	46,871	$	301,984		4.1	%
IBNR Reserves		30,899		47,977		122,276		201,152		33,486		36,687		118,325		188,498		6.7	%
Total	$	218,419	$	104,108	$	193,126	$	515,653	$	222,397	$	102,889	$	165,196	$	490,482		5.1	%

The following tables present the current and prior accident year changes in our Net Losses and LAE Ratio for the three months ended March 31, 2019 and 2018:

	Int'l Insurance
	Three Months Ended March 31, 2019												Three Months Ended March 31, 2018
							Professional												Professional						Point
	Marine			P&C			Liability			Total			Marine			P&C			Liability			Total			Change
Net Losses and LAE Ratio		64.3	%		46.2	%		96.5	%		69.3	%		52.1	%		42.4	%		50.3	%		49.2	%		20.1
Net Prior AY Reserve    (Release)/Strengthening		5.6	%		(2.2	%)		42.1	%		15.4	%		(1.8	%)		(4.0	%)		(2.8	%)		(2.7	%)		18.1
Net Current AY Losses and LAE    Ratio		58.7	%		48.4	%		54.4	%		53.9	%		53.9	%		46.4	%		53.1	%		51.9	%		2.0

37

For the three months ended March 31, 2019, our Reported Net Losses and LAE Ratio increased 20.1 points as compared to the same period in 2018 driven by:

Prior Year Reserve Development

For the three months ended March 31, 2019, our Net Prior AY Losses and LAE Ratio increased 18.1 points as compared to the same period in 2018 primarily driven by:

• Our Marine operating segment for the three months ended March 31, 2019 recognized $2.0 million of Net Prior AY Reserve Strengthening compared to $0.7 million of Net Prior AY Reserve Release for the same period in 2018 due to adverse loss development primarily within our Cargo product line.

• Our P&C operating segment for the three months ended March 31, 2019 recognized $0.8 million of Net Prior AY Reserve Release, compared to $0.9 million of Net Prior AY Reserve Release for the same period in 2018.

• Our Professional Liability operating segment for the three months ended March 31, 2019 recognized 15.6 million of Net Prior AY Reserve Strengthening, compared to $0.9 million of Net Prior AY Reserve Release for the same period in 2018, due to large loss activity primarily within our D&O division, and to a lesser extent our E&O and Other Professional Liability divisions.

Changes in the Current Accident Year Loss Ratio

For the three months ended March 31, 2019, our Net Current AY Losses and LAE Ratio increased 2.0 points as compared to the same period in 2018, primarily due to an increased level of catastrophe activity. During the three months ended March 31, 2019, we recognized $2.0 million of net catastrophe losses related to the Russian River Flood in California, as compared to the same period in 2018 in which we did not recognize any catastrophe activity.

Commission Expenses

Our Commission Expense Ratio for the three months ended March 31, 2019 increased 3.1 points as compared to the same period in 2018, driven by increases in our P&C and Professional Liability operating segments, partially offset by a decrease in our Marine operating segment.

The decrease in our Marine operating segment was due to lower gross commission rates.

The increase in our P&C operating segment was due to reduced ceding commission accrual release within our NavTech division, as well as the impact of business acquired from the NICE Group in the second quarter of 2018, which carries higher gross commissions.

The increase in our Professional Liability operating segment was due to mix of business and the impact of higher excess of loss costs.

Other Operating Expenses

Other Operating Expenses for the three months ended March 31, 2019 increased $11.9 million as compared to the same period in 2018 primarily due to increased expenses related to the NICE Group which was acquired in second quarter 2018, higher professional fees and severance expenses.  

Other Underwriting Income

Other Underwriting Income for the three months ended March 31, 2019 increased $1.0 million, as compared to the same period in 2018 primarily due to managing agent fee income related to the NICE Group.

38

GlobalRe

The following tables summarize our Underwriting Profit (Loss) for our GlobalRe reporting segment for the three months ended March 31, 2019 and 2018:

	GlobalRe
	Three Months Ended March 31,
amounts in thousands	2019			2018			Change 2019 vs. 2018
Gross Written Premiums	$	132,880		$	127,424			4.3	%
Ceded Written Premiums		(7,783	)		(6,493	)		19.9	%
Net Written Premiums	$	125,097		$	120,931			3.4	%
Retention Ratio		94.1	%		94.9	%		(0.8	)
Net Earned Premiums	$	66,239		$	56,504			17.2	%
Net Losses and LAE		(43,769	)		(29,880	)		46.5	%
Commission Expenses		(16,433	)		(13,768	)		19.4	%
Other Operating Expenses		(8,124	)		(5,405	)		50.3	%
Other Underwriting Income (Expense)		(56	)		138		NM
Underwriting Profit (Loss)	$	(2,143	)	$	7,589		NM
Losses and LAE Ratio		66.1	%		52.9	%
Commission Expense Ratio		24.8	%		24.4	%
Other Operating Expense Ratio (1)		12.3	%		9.3	%
Combined Ratio		103.2	%		86.6	%

(1) - Includes Other Operating Expenses and Other Underwriting Income.

NM - Percentage change not meaningful

Gross Written Premiums

Gross Written Premiums increased $5.5 million for the three months ended March 31, 2019 compared to the same period in 2018, primarily due to Global Credit, a new product that commenced writing business in 2019, as well as increased new and renewal business in our P&C, Specialty Casualty and Agriculture products. These increases were partially offset by decreases in our Accident & Health (“A&H”) and Surety products due to non-renewals in A&H and decreased premium estimates in Surety.

Ceded Written Premiums

Ceded Written Premiums were $7.8 million, resulting in a retention ratio of 94.1% of Net Written Premiums to Gross Written Premiums, for the three months ended March 31, 2019, compared to Ceded Written Premiums of $6.5 million, resulting in a retention ratio of 94.9%, for the same period in 2018. The decrease in the retention ratio was primarily driven by higher excess of loss costs in our P&C product.

Net Earned Premiums

Net Earned Premiums for the three months ended March 31, 2019 increased $9.7 million as compared to the same period in 2018, due to continued growth across all of our products and the addition of our new Global Credit product.

Net Losses and LAE

The Net Losses and LAE Reserves as of March 31, 2019 and December 31, 2018 were as follows:

	GlobalRe
	As of
	March 31,		December 31,
amounts in thousands	2019		2018		% Change
Case Reserves	$	71,677	$	60,669		18.1	%
IBNR Reserves		104,091		117,927		(11.7	%)
Total	$	175,768	$	178,596		(1.6	%)

39

The following tables present the current and prior accident year changes in our Net Losses and LAE Ratio for the three months ended March 31, 2019 and 2018:

	GlobalRe
	Three Months Ended March 31,						Point
	2019			2018			Change
Net Losses and LAE Ratio		66.1	%		52.9	%		13.2
Net Prior AY Reserve (Release)/Strengthening		13.4	%		(0.6	%)		14.0
Net Current AY Losses and LAE Ratio		52.7	%		53.5	%		(0.8	)

For the three months ended March 31, 2019, our Reported Net Losses and LAE Ratio increased 13.2 points as compared to the same period in 2018 driven by:

Prior Year Reserve Development

For the three months ended March 31, 2019, our Net Prior AY Losses and LAE Ratio increased 14.0 points as compared to the same period in 2018. For the three months ended March 31, 2019, we recognized $8.9 million of Net Prior AY Reserve Strengthening primarily due to $5.6 million and $5.3 million of strengthening within our Specialty Casualty and P&C products, respectively, related to unfavorable loss emergence, as well as development on net prior AY catastrophe losses within our P&C product. Additionally, we recognized $1.0 million of strengthening within our Marine product due to loss development. This reserve strengthening was partially offset by $3.0 million of Net Prior AY Reserve Release within our Surety product due to favorable loss emergence. This compares to $0.4 million of Net Prior AY Reserve Release for the same period in 2018 mostly related to our A&H and Surety products, partially offset by strengthening in our P&C product.

Changes in the Current Accident Year Loss Ratio

For the three months ended March 31, 2019, our Net Current AY Losses and LAE Ratio decreased 0.8 points as compared to the same period in 2018, primarily driven by changes in mix of business with an increase in net earned premiums related to our Global Credit and P&C products, which carry a lower loss ratio.

Commission Expenses

Our Commission Expense Ratio for the three months ended March 31, 2019 increased 0.4 points compared to the same period in 2018. The increase was primarily due to higher profit commission expense particularly in our A&H, Surety and Agriculture products, partially offset by changes in mix of business in our Global Credit, A&H and P&C products.

Other Operating Expenses and Other Underwriting Income

Other Operating Expenses for the three months ended March 31, 2019 increased $2.7 million as compared to the same period in 2018, primarily due to increases in employee expenses and professional service fees.

Capital Resources and Liquidity

Capital Resources

Our capital resources consist of funds deployed or available to be deployed to support our business operations. As of March 31, 2019 and December 31, 2018, our capital resources were as follows:

	As of
amounts in thousands	March 31, 2019			December 31, 2018
Senior Notes	$	264,095		$	264,052
Stockholders' Equity		1,230,383			1,186,850
Total Capitalization	$	1,494,478		$	1,450,902
Ratio of Debt to Total Capitalization		17.7	%		18.2	%

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 our 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.

40

We primarily rely upon dividends from our subsidiaries to meet our Parent Company’s obligations, which mostly consist of semi-annual (April and October) interest payments of $7.6 million on the Senior Notes. As described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018, we continue to believe that the dividend capacity of our subsidiaries will provide our Parent Company with sufficient liquidity for the foreseeable future.

Senior Notes and Credit Facility

As of March 31, 2019, letters of credit with an aggregate face amount of 24.0 million Australian Dollars were outstanding under the credit facility with Barclays Bank PLC that we entered into on November 4, 2016 and amended on October 30, 2017 (the “Australian Facility”).

As of March 31, 2019, letters of credit with an aggregate face amount of $165.0 million and £60.0 million were outstanding under the credit facility with ING Bank N.V., London Branch, individually and as administrative agent for a syndicate of lenders, that we entered into on November 7, 2018 (the “Club Facility”), and we had an aggregate of $1.2 million of cash collateral posted.

As of March 31, 2019, letters of credit with an aggregate face amount of $8.0 million were outstanding under the credit facility with ING Bank N.V., London Branch that we entered into on November 20, 2015 and amended on January 23, 2019 (the “Bilateral Facility”).

Shelf Registration

We generally maintain the ability to issue certain classes of debt and equity securities via a universal shelf registration statement filed with the SEC, which is renewed every three years. The shelf registration provides us the means to access the debt and equity markets relatively quickly. Our current shelf registration, which was filed on April 13, 2018 with the SEC, expires in 2021. 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.

Consolidated Cash Flows

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 our Company. The payment of gross claims and related collections from reinsurers with respect to large losses could significantly impact our liquidity needs. However, in general, we expect to collect our paid reinsurance recoverables under the terms described above.

Net Cash Provided by Operating Activities was $30.9 million for the three months ended March 31, 2019 compared to $35.8 million for the same period in 2018. Operating cash flow decreased from the prior year due to growth in claim payments and operating expenses that modestly outpaced the growth in collections of premiums and reinsurance recoverables. Partially offsetting these amounts was an increase in collection of investment income due to growth in invested assets coupled with higher yields.

Net Cash Used in Investing Activities was $5.0 million for the three months ended March 31, 2019 compared to Net Cash Provided of $33.7 million for the same period in 2018. The decrease in cash used in investing activities is due in part to a temporary increase in cash and cash equivalents at March 31, 2019 as we anticipate merger-related cash outflows and hold cash equivalents for unsettled trades at the end of the quarter.   

Net Cash Used in Financing Activities was $8.9 million for the three months ended March 31, 2019 compared to $7.1 million for the same period in 2018. The increase in cash used in financing activities is primarily related to increased tax withholding payments on vested stock compensation in 2019 as compared with 2018.  

41

Investments

Our investment portfolio is invested primarily in publicly traded, investment grade, fixed income securities with an average credit quality of “AA-/Aa3” as rated by S&P or Moody’s. As of March 31, 2019, our portfolio had a duration of 3.4 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 March 31, 2019 and December 31, 2018, all Fixed Maturities Securities were classified as Available-For-Sale and all of our Equity Securities have been measured at fair value with changes in fair value recognized through Net Income.

The portfolio is externally managed by independent, professional investment managers and is broadly diversified across geographies, sectors and issuers. The primary objectives are to maximize total investment return in the context of preserving and enhancing stockholder value and the statutory surplus of our regulated insurance companies. As part of our overall investment strategy, we seek to build a tax efficient investment portfolio by maintaining an allocation to tax-exempt municipal bonds. The tax-exempt portion of our Fixed Maturities portfolio at March 31, 2019 was 17.9% compared to 16.5% at December 31, 2018. Additionally, 86.2% and 94.3% of our equity portfolio is invested in tax efficient securities at March 31, 2019 and 2018, respectively, which qualify for the dividends received deduction. The investments are subject to the oversight of the respective insurance companies’ Boards of Directors and the Finance Committee of our Parent Company’s Board of Directors.

We are a specialty insurance company and periods of moderate economic recession or inflation tend not to have a significant direct effect on 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 following table summarizes the composition of our investments at fair value:

	Fair Value as of
amounts in thousands	March 31, 2019		December 31, 2018		% Change
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and    Foreign Government Bonds	$	226,093	$	239,776		(5.7	%)
States, Municipalities and Political Subdivisions		698,980		646,551		8.1	%
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		329,582		335,542		(1.8	%)
Residential Mortgage Obligations		154,149		138,373		11.4	%
Asset-Backed Securities		532,027		531,991		0.0	%
Commercial Mortgage-Backed Securities		199,450		188,201		6.0	%
Subtotal	$	1,215,208	$	1,194,107		1.8	%
Corporate Exposures		1,019,527		1,002,489		1.7	%
Total Fixed Maturities	$	3,159,808	$	3,082,923		2.5	%
Equity Securities:
Common Stocks	$	181,512	$	166,353		9.1	%
Preferred Stocks		176,935		173,539		2.0	%
Total Equity Securities	$	358,447	$	339,892		5.5	%
Short-Term Investments		7,287		10,233		(28.8	%)
Total Investments	$	3,525,542	$	3,433,048		2.7	%

Fixed Maturities increased from December 31, 2018 due to an increase in unrealized gains resulting from a decrease in interest rates and spread tightening. The increase in common stocks is due to a rebound in the equity markets. The Company increased their allocation of Municipal Bonds and Residential Mortgage Obligations due to favorable market conditions.

42

The following table sets forth the amount of our Fixed Maturities as of March 31, 2019 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s rating. The total rating is the weighted average quality rating for the Fixed Maturities portfolio as a whole.

		As of March 31, 2019
amounts in thousands	Rating	Fair Value		AmortizedCost
Rating Description:
Extremely Strong	AAA	$	630,708	$	629,023
Very Strong	AA		1,185,689		1,182,308
Strong	A		826,331		816,916
Adequate	BBB		402,610		400,605
Speculative	BB & Below		110,315		110,833
Not Rated	NR		4,155		3,937
Total	AA-	$	3,159,808	$	3,143,622

The following table sets forth the composition of the non-government guaranteed Fixed Maturities categorized by asset class and 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 March 31, 2019:

	As of March 31, 2019
amounts in thousands	AAA		AA		A		BBB		BBand below		Not Rated		FairValue		Amortized Cost
Municipal Bonds	$	74,087	$	441,582	$	170,996	$	12,315	$	—	$	—	$	698,980	$	677,634
Agency Residential Mortgage-Backed		—		329,582		—		—		—		—		329,582		337,247
Residential Mortgage-Backed		107,717		7,757		230		35,333		1,786		1,326		154,149		152,906
Asset-Backed		220,021		195,982		89,827		26,197		—	—			532,027		534,590
Commercial Mortgage-Backed		126,302		44,073		27,273		—		—		1,802		199,450		198,758
Corporate Exposures		4,744		72,415		504,048		328,764		108,529		1,027		1,019,527		1,014,678
Total	$	532,871	$	1,091,391	$	792,374	$	402,609	$	110,315	$	4,155	$	2,933,715	$	2,915,813

The following table sets forth our U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds, as well as our State, Municipality and Political Subdivision bond holdings by type:

	As of March 31, 2019
amounts in thousands	FairValue		AmortizedCost
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds:
U.S. Treasury Bonds	$	26,308	$	25,652
Agency Bonds		59,557		59,664
Foreign Government Bonds		140,228		142,493
Total U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	226,093	$	227,809
States, Municipalities and Political Subdivisions:
General Obligation	$	127,455	$	123,142
Prerefunded		48,596		46,796
Revenue		396,719		381,872
Taxable		126,210		125,824
Total States, Municipalities and Political Subdivisions	$	698,980	$	677,634

As of March 31, 2019, we own $23.4 million of municipal securities, which are credit enhanced by various financial guarantors that have an average underlying credit rating of A.

43

The following table sets forth our Agency Residential Mortgage-Backed Securities (“ARMBS”) issued by the Government National Mortgage Association (“GNMA”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”) and the quality category (Prime, Alternative A-paper (“Alt-A”), and Other Non-Agency) for Residential Mortgage-Backed Securities (“RMBS”) as of March 31, 2019:

	As of March 31, 2019
amounts in thousands	Fair Value		AmortizedCost
ARMBS:
GNMA	$	33,876	$	34,171
FNMA		206,712		212,414
FHLMC		88,994		90,662
Total Agency Residential Mortgage-Backed Securities	$	329,582	$	337,247
RMBS:
Prime	$	55,759	$	55,495
Alt-A		644		573
Other Non-Agency		97,746		96,838
Total Residential Mortgage-Backed Securities	$	154,149	$	152,906

We analyze our Mortgage-Backed Securities by credit quality of the underlying collateral distinguishing between the securities issued by FNMA, FHLMC and GNMA, which are federal government sponsored entities, and non-agency backed securities broken out by Prime, Alt-A, and Other Non-Agency collateral. The securities issued by FNMA and FHLMC are the obligations of each respective entity. The U.S. Department of the Treasury has agreed to provide support to FNMA and FHLMC under a Preferred Stock Purchase Agreement by committing to make quarterly payments to these enterprises, if needed, to maintain a zero net worth.

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 greater than Prime but less than subprime. The subprime collateral consists of mortgages or other collateral from borrowers with low credit ratings. We have no exposure to subprime RMBS at March 31, 2019. Prime, subprime and Alt-A categories are as defined by S&P.

Details of the collateral of our Asset-Backed Securities portfolio as of March 31, 2019 are presented below:

	As of March 31, 2019
amounts in thousands	Fair Value		AmortizedCost
Auto Loans	$	44,513	$	44,343
Aircraft		23,389		22,916
Single Family Rentals		90,452		90,297
Consumer Loans		42,835		42,855
Credit Cards		23,176		23,211
Collateralized Loan Obligations		239,670		243,150
Time Share		21,654		21,883
Miscellaneous		46,338		45,935
Total Asset-Backed Securities	$	532,027	$	534,590

Details of our Corporate Exposures portfolio as of March 31, 2019 are presented below:

	As of March 31, 2019
amounts in thousands	Fair Value		AmortizedCost
Corporate Exposures:
Corporate Bonds	$	817,290	$	810,183
Hybrid Bonds		154,147		157,764
Redeemable Preferred Stocks		48,090		46,731
Total Corporate Exposures	$	1,019,527	$	1,014,678

44

As of March 31, 2019, the fair value of securities issued in foreign countries was $384.5 million, with an amortized cost of $384.9 million, representing 10.9% of our total Fixed Maturities and Equity Securities. Our largest exposure is Canada with a total of $151.4 million followed by the United Kingdom with a total of $45.0 million.

Our Company did not have gross unrealized investment losses where the fair value was less than 80% of amortized cost as of March 31, 2019.

Our Company did not have any credit related OTTI losses during the three months ended March 31, 2019 and 2018.

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 Fixed Maturities 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. We may realize investment losses to the extent our liquidity needs require the disposition of Fixed Maturities 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.

Critical Accounting Estimates

Our Company’s Annual Report on Form 10-K for the year ended December 31, 2018 discloses our critical accounting estimates (refer to Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates).

We believe the items that require the most subjective and complex estimates involve the reporting of:

• Reserves for Losses and LAE (including losses that have occurred but were not reported to us by the financial reporting date);

• Reinsurance Recoverables, including a provision for uncollectible reinsurance;

• Written and Unearned Premiums;

• The recoverability of Deferred Tax Assets;

• The impairment of investment securities;

• Valuation of invested assets; and

• Valuation of Goodwill and Intangible Assets.

We believe that the critical accounting estimates discussion in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018 continues to describe the significant estimates and judgements included in the preparation of our Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Refer to Item 7A included in our Company’s 2018 Annual Report on Form 10-K. There have been no material changes to this item since December 31, 2018.

Item 4. Controls and Procedures

(a) Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such, term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

45

On June 7, 2018 we acquired Bracht, Deckers & Mackelbert NV (“BDM”), a specialty underwriting agency, and its affiliated insurance company, Assurances Continentales – Continentale Verzekeringen NV (“ASCO”). SEC guidance permits management to omit an assessment of an acquired business’ internal control over financial reporting from management’s assessment of internal control over financial reporting for a period not to exceed one year from the date of the acquisition. Accordingly, we have not yet included BDM and ASCO in our assessment of the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of March 31, 2019. For the three months ended March 31, 2019, BDM and ASCO accounted for $15.9 million of our total revenue, and as of March 31, 2019 had total assets of $158.8 million.

(b) Other than the changes described in the paragraph below, there were no further changes during the first fiscal quarter in our internal control over financial reporting. As described above, our management excluded an assessment of the internal controls over financial reporting of BDM and ASCO from its assessment of the effectiveness of our internal control over financial reporting as of March 31, 2019. The Company has begun integrating BDM and ASCO into its existing control procedures, which may lead us to modify certain internal controls in future periods.

We have continued certain transformation initiatives to automate, centralize and simplify our business processes and systems. These are long-term initiatives that we believe will enhance our internal control over financial reporting due to increased automation and integration of related processes. These initiatives have resulted in new manual compensating controls to enhance our control framework as certain systems are being upgraded to include expanded functionality. As the transformation initiative continues, we anticipate the effort will result in an increase of automated controls as certain manual control processes are replaced. We will continue to monitor and evaluate the effectiveness of our internal control over financial reporting throughout the transformation.

(c) In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

46

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 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 us. Our Company accounts for such activity through the establishment of unpaid losses and LAE reserves. Our Company’s management believes that our 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 consolidated financial condition, results of operations, or cash flows of our Company.

Our subsidiaries are also occasionally 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, our Company believes we have valid defenses to these cases. Our Company’s 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 our Company’s 2018 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

47

Item 6. Exhibits

Exhibit No.	Description of Exhibit	Previously filed and Incorporated Herein by Reference to:
2-1	Agreement and Plan of Merger, dated as of August 22, 2018 by and among the Company, The Hartford Financial Services Group, Inc., and Renato Acquisition Co.	Form 8-K filed August 22, 2018
3-1	Restated Certificate of Incorporation	Form S-8 filed July 26, 2002   (File No. 333-97183)
3-2	Certificate of Amendment to the Restated Certificate of Incorporation	Form S-8 filed July 26, 2002   (File No. 333-97183)
3-3	Certificate of Amendment to the Restated Certificate of Incorporation	Form 10-Q for June 30, 2006
3-4	Amended and Restated By-laws of the Company	Form 8-K filed August 22, 2018   (File No. 000-15886)
4-1	Specimen of Common Stock certificate, par value $0.10 per share	Form S-8 filed June 20, 2003   (File No. 333-106317)
4-2	Second Supplemental Indenture, dated as of October 4, 2013, between the Company and The Bank of New York Mellon	Form 8-K filed October 4, 2013
10-1*	Stock Option Plan	Form S-1 (File No. 33-5667) (P)
10-2*	Non-Qualified Stock Option Plan	Form S-4 (File No. 33-75918) (P)
10-3*	2002 Stock Incentive Plan	Proxy Statement filed May 29, 2002
10-4*	Executive Performance Incentive Plan	Proxy Statement filed April 7, 2008
10-5	Form of Indemnity Agreement by the Company and the Selling Stockholders (as defined therein)	Amendment No. 2 to Form S-3 dated   October 1, 2003  (File No.333-   1008424)
10-6*	Second Amended and Restated 2005 Stock Incentive Plan	Proxy Statement filed April 12, 2013
10-7*	Non-Qualified Deferred Compensation Plan	Form 10-Q for March 31, 2015
10-8	Guarantee, dated February 16, 2017, entered into by the Company	Form 10-K for December 31, 2016
10-9	Share Purchase Agreement, dated as of December 15, 2017, by and between the Company and Ackermans & van Haaren NV, SIPEF NV, Mr. Jozef Gielen and Kapimar Comm.V	Form 8-K filed December 18, 2017
10-10*	The Navigators Group, Inc. Amended and Restated Employee Stock Purchase Plan	Proxy Statement filed March 29, 2018
10-11*	Employment Agreement, dated August 21, 2018, by and among the Company, Navigators Management Company, Inc. and Stanley A. Galanski	Form 8-K filed August 22, 2018
10-12*	Employment Agreement, dated August 21, 2018, by and among the Company, Navigators Management Company, Inc. and Ciro M. DeFalco	Form 8-K filed August 22, 2018
10-15*	Form of President’s Award Agreement	Form 8-K filed August 22, 2018
10-16	Fourth Amended and Restated Funds at Lloyd's Letter of Credit Agreement, dated as of November 7, 2018, among the Company, the lenders party thereto, and ING Bank N.V., London Branch, individually and as Administrative Agent and Letter of Credit Agent	Form 8-K filed November 7, 2018
10-17*	Retirement Agreement and Release of All Claims, dated March 15, 2019, made by and between Michael J. Casella and Navigators Management Company, Inc.	**
11-1	Statement re Computation of Per Share Earnings (Loss)	**

48

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	**

*     Management contract or compensatory plan or arrangement

**   Included herein

(P)  Paper filing only

49

Signatures

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

	The Navigators Group, Inc.
	(Company)
Dated:  May 9, 2019	By:	/s/ Ciro M. DeFalco
		Ciro M. DeFalco
		Executive Vice President and Chief Financial Officer

50

EX-10.17

Exhibit 10.17

RETIREMENT AGREEMENT AND RELEASE OF ALL CLAIMS

This Retirement Agreement and Release of All Claims (“Agreement”) is made by and between Michael J. Casella (“Casella”) and Navigators Management Company, Inc. (“NMC”) and was given to Casella on March 8, 2019.  In consideration of the covenants and agreements contained in this document and the consideration described herein, Casella and NMC (collectively, the “Parties”) agree as follows:

1. Retirement from Employment.  Casella’s employment with NMC shall terminate effective on March 15, 2019 (the “Termination Date”).  Effective on the Termination Date, Casella shall resign from all Board of Director and officer positions with NMC and its subsidiaries and affiliates, including, without limitation, such regulated entities as Navigators Underwriting Agency Limited, Navigators Corporate Underwriters Ltd., Navigators International Insurance Company Ltd., Assurances Continentales – Continentale Verzekeringen NV, Navigators Insurance Company and Navigators Specialty Insurance Company.

2. NMC’s Obligations.  If Casella timely provides to NMC a fully executed original of this Agreement, does not revoke his agreement pursuant to Paragraph 11(g), and otherwise fulfills his obligations under this Agreement, NMC will:

(a) pay to Casella, no later than 30 calendar days following the Termination Date, a cash payment in the amount of $2,042,166 (“Cash Payment”) which reflects all amounts owed under the President’s Award Agreement between the parties dated August 14, 2018 (the “President’s Award Agreement”) compensation for Casella’s outstanding and unvested stock and six month’s severance, and apartment/parking lease-breaking fees, all of which shall be accepted as sufficient compensation for Casella’s obligations under sections 7 and 12 of this Agreement; and

(b) as noted in Casella’s Offer Letter dated March 4, 2016, provide assignment-related tax preparation services to Casella, including tax preparations for the Cash Payment, for a period of time after the Termination Date, the duration of which will be determined by the Company.  

3. Release by Casella. To the greatest extent permitted by law, Casella, on behalf of himself and his heirs, successors, agents, and assigns, hereby releases and forever discharges NMC, which is specifically defined for purposes of this release to include NMC and all of its and its parent’s predecessor, successor, subsidiary, affiliated and related companies and entities (specifically including, The Navigators Group, Inc., Navigators Insurance Company, and Navigators Specialty Insurance Company) and all of its/their officers, directors, employees, and agents (the “Released Parties”), from any and all liability for any and all claims arising on or prior to the effective date of this Agreement.  For the avoidance of doubt, this shall include The Hartford Financial Services Group, Inc., as the anticipated successor company to The Navigators Group, Inc.  This release includes, but is not limited to,

any and all claims, rights, demands, and causes of action of any and every kind, whether now known or unknown, real or potential, whether arisingout of any claim for wrongful termination, breach of contract, discrimination, harassment, retaliation, and/or any other tort, personal injury, or violation of public policy or statute, including but not limited to Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Americans With Disabilities Act, the Fair Labor Standards Act, and any and every other federal, state, and local law, statute, and ordinance and that certain Offer Letter dated March 4, 2016by and between Casella and Navigators Management Company, Inc.  However, nothing in this Agreement shall be construed as waiving or releasing any claim which cannot be waived or released by private agreement of the Parties, or as prohibiting Casellafrom filing a charge or complaint, including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission (“EEOC”) or the National Labor Relations Board (“NLRB”), or as prohibiting Casella from participating in any investigation or proceeding conducted by the EEOC or NLRB.  Casella agrees, however, that by signing this Agreement, he waives all rights to individual relief based on claims asserted in any such EEOC proceeding. Anything to the contrary notwithstanding, nothing herein shall release any of the Released Parties from any liabilities based on  (a)Casella’s right to enforce the terms and conditions of this Agreement, (b)any right or claim that arises after the date this Agreement is executed by Casella, (c) any right Casella may have to vested or accrued benefits or entitlements under any applicable plan, agreement, program, award, policy or arrangement of NMC or its parents, subsidiaries and affiliates, (d) any rights Casella may have as a shareholder of NMC or any of its subsidiaries or affiliates, (e) Casella’s right to indemnification and advancement of expenses in accordance with applicable laws and/or the certificate of incorporation and by-laws of NMC or its parents, subsidiaries and affiliates or this Agreement or any applicable insurance policy, or (f) any right Casella may have to obtain contribution as permitted by law in the event of entry of judgment against Casella as a result of any act or failure to act for which Casella, on the one hand, and the Released Parties, on the other hand, are jointly liable.

4. No Knowledge of Improprieties.  Casella acknowledges that he was and is expected to report to NMC or its affiliates known and suspected violations of law by employees, agents and/or customers of NMC or its affiliates, and represents that he has fully complied with this obligation and that he is not aware of an does not suspect any violation of law which he has not previously reported.  

5. Confidentiality of NMC’s Information.  Casella acknowledges and agrees that he was given access to and has obtained knowledge and information about NMC and its subsidiary and affiliated companies which is private, confidential, proprietary, and/or constitutes trade secret information.  As a material provision of this Agreement, Casella agrees to abide by all policies of NMC which limit the dissemination of such information and further to keep all such information completely confidential and not to disclose or publish that information to anyone, including but not limited to past, present, or prospective employees, customers,

2.

vendors, competitors, and/or business partners of NMC, and/or prospective or future employers of Casella, except(a) if disclosure of such informationis specifically required by subpoena, court order, any governmental agency having jurisdiction or by any administrative or legislative body (including a committee thereof); (b) if disclosure of such information is required to perform Casella’sobligations under Paragraphs 12 and 13 of this Agreement; (c) if such information becomes generally known to and available for use by the public other than as a result of Casella’s acts or omissions in violation of this Paragraph 5, (d) if disclosure of such informationbecomes necessary in connection with the defense of any claim brought against Casella, NMC or any of its subsidiaries and affiliates, or (e) if disclosureof such information is made to enforce any rights or defend any claims hereunder or under any other agreement to which Casellais a party, provided that such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed to the extent necessary in the formal proceedings related thereto.To the extent Casella possesses or possessed such information in written or electronic form, Casella represents and promises that he has returnedall such information (including all copies) to NMC.

6. Nondisparagement.  Casella agrees not to make any written or oral statement about NMC and its subsidiary and affiliated companies (specifically including The Navigators Group, Inc., Navigators Insurance Company, and Navigators Specialty Insurance Company and all of its/their officers, directors, employees, products, and services) which Casella knows or reasonably should know to be untrue and agrees not to make any disparaging or negative written or oral statement concerning NMC and its subsidiary and affiliated companies or any of their successor companies (specifically including but not limited to The Navigators Group, Inc., Navigators Underwriting Agency Limited, Syndicate 1221, Navigators International Insurance Company Ltd., Assurances Continentales – Continentale Verzekeringen NV,Navigators Insurance Company, Navigators Specialty Insurance Company and The Hartford Financial Services Group, Inc., if it shall become a successor company of The Navigators Group, Inc., and all of its/their officers, directors, employees, products, and services) with the intent to cause injury or harm.  Nothing in this Agreement shall prevent the disclosure of truthful information, if required by law.

7. President’s Award Agreement.  For the avoidance of doubt, Casella covenants and agrees that his obligations’ under the President’s Award Agreement that by their nature survive his termination of employment, including but not limited to those obligations pertaining to non-solicitation and non-hiring of employees and the non-solicitation of customers, agents and others, shall continue after the Termination Date in accordance with their terms.  

8. No Assignment of Claims.  Casella warrants that he has not transferred to any other person or entity any of the rights or causes of action released in this Agreement.

9. No Other Monies Due.  Except as provided in Paragraphs 2, 12 and 13 and the following “Accrued Obligations”, no other money, expense, cost, or fee shall be paid by NMC to Casella as part of this Agreement: (a) accrued but unpaid base

3.

salary through the Termination Date; (b) payment for accrued but unused vacation days through the Termination Date; (c) any unreimbursed business expenses properly incurred by Casella on or prior to the Termination Date; and (d) compensation and benefits payable to Casella under the terms or rules of NMC’s compensation and benefit plans (other than severance plans, equity compensation plans and bonus plans) in which Casella participated prior to the Termination Date.

10. Certification of Understanding.  Casella certifies that he understands and has voluntarily agreed to all of the terms of this Agreement.  Casella also certifies that he does not rely and has not relied on any representation or statement made by NMC or by any agent, representative, or attorney of NMC with regard to the subject matter of this Agreement, except as set forth herein.

11. Fairness of Agreement.  Casella understands and agrees that he:

a. Has had more than twenty-one (21) days within which to consider this Agreement before executing it.

b. Has carefully read and fully understands all of the provisions of this Agreement.

c. Is, through this Agreement, releasing NMC and related entities and individuals (as described in Paragraph 3) from any and all claims he has or may have against it/them, including claims under the Age Discrimination in Employment Act of 1967 (29 U.S.C. § 621, et seq.).

d. Knowingly and voluntarily agrees to all of the terms of this Agreement.

e. Knowingly and voluntarily intends to be legally bound by all of the terms of this Agreement.

f. Was advised and hereby is advised in writing to consider the terms of this Agreement and consult with an attorney of his choice prior to executing this Agreement.

g. Has a full seven (7) days following the execution of this Agreement to revoke this Agreement and has been and hereby is advised in writing that this Agreement shall not become effective or enforceable until the revocation period has expired.  Any such revocation must be in a writing received by Denise Lowsley, Senior Vice President, by the seventh (7^th) day, or Ms. Lowsley must be notified by phone on or before the seventh (7^th) day and a written revocation must then be received by him within seven (7) days thereafter.

4.

h. Understands that rights or claims under the Age Discrimination in Employment Act of 1967 (29 U.S.C. § 621, et seq.) that may arise after the date this Agreement is executed are not waived.

12. Post-Separation Cooperation.  For a period of one year following the Termination Date, Casella agrees to cooperate with and make himself reasonably available to NMC (including its subsidiary and affiliated companies and its/their employees, and any successor company of NMC or its affiliated companies) to provide information that was learned by him during his employment. In the event any such persons require Casella’s cooperation in accordance with this Paragraph 12, NMC shall, upon receipt of appropriate documentation from Casella, reimburse Casella for reasonable costs and expenses incurred by Casella as a result of providing such cooperation (including travel expenses at the same level of travel and accommodations as when he was an executive of NMC). It is anticipated that this cooperation obligation will be limited to periodic telephone and email communications. Casella acknowledges that the consideration provided to him in this Agreement is ample compensation for his cooperation.

13. Indemnification.  NMC and its subsidiary and affiliated companies agree to indemnify Casella against any claim which has been or which may be asserted against him based on his acts or omissions arising out of his employment or service as an officer or director of NMC or any of its subsidiaries or affiliates, consistent with and to the fullest extent permitted by applicable law and/or the relevant certificate of incorporation and bylaws or other constituent documents for the relevant subsidiary or affiliate. NMC shall also continue to provide Casella with directors and officers liability insurance coverage (which shall be substantially the same as his coverage prior to the Termination Date) for all claims which have been or may be asserted against him based on his acts or omissions arising out of his employment or service as an officer or director of NMC or any of its subsidiaries or affiliates.  Casella, in turn, agrees to cooperate fully with NMC and its subsidiary and affiliated companies with regard to the defense of any such claims.

14. No Admission of Liability.  This Agreement and compliance therewith shall not be construed as an admission by NMC or Casella of any liability whatsoever or as an admission of any wrongdoing.  NMC and Casella specifically disclaim all wrongdoing and disclaim any liability to the other for any alleged violation of the other’s rights, including any violation of common law, statute, or contract.

15. Compliance With Section 409A.  This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and will be interpreted in a manner intended to comply with Section 409A of the Code.  Notwithstanding anything herein to the contrary, (i) if at the time of Casella’s separation of employment with NMC, he is a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such separation of employment is necessary in order to prevent any accelerated or additional tax under Section 409A

5.

of the Code, then NMC will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Casella) until the date that is six months following Casella’s separation from employment with NMC (or the earliest date as is permitted under Section 409A of the Code) and (ii) if any other payments of money or other benefits due to Casella hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by NMC, that does not cause such an accelerated or additional tax.  To the extent any reimbursements or in-kind benefits due to Casella under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Casella in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv).  Each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.  All payments to be made upon a separation from employment under this Agreement may only be made upon a “separation from service” within the meaning of such term under Section 409A of the Code.

16. Governing Law.  This Agreement shall in all respects be interpreted, enforced and governed under the laws of the State of Connecticut and any dispute arising out of or related to this Agreement shall be submitted to the state or federal courts located in the County of Fairfield in the State of Connecticut, whose jurisdiction is hereby consented to by the parties.

17. Severability.  Should any clause or provision of this Agreement be declared illegal or unenforceable, it shall be modified as minimally necessary to be enforceable.  If the provision cannot be modified to be enforceable, such provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect.

18. Amendment.  This Agreement may not be modified, altered or changed, except upon express written consent of an officer of NMC and Casella, wherein specific reference is made to this Agreement.

19. Entire Agreement of the Parties.  This document supersedes any and all prior agreements or understandings, written or oral, pertaining to matters encompassed by this Agreement.

20. Signatures.  This Agreement shall have no force or effect unless and until it is signed by Casella and an authorized representative of NMC, and then only after the revocation period set forth in Paragraph 11(g) has expired.  

21. Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

6.

22. Construction.  The headings and captions of this Agreement are inserted for convenience only and shall not be deemed part of this Agreement for any purpose whatsoever.  Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates.  The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

23. Notices.  Any notice, demand, claim or other communication under this Agreement will be in writing and will be deemed to have been given (a) on delivery if delivered personally or by registered or certified mail (b) on the date of transmission thereof if sent by electronic or facsimile transmission and delivery is confirmed, but, in each case, only if addressed to the Parties in the following manner at the following addresses (or at the other address as a party may specify by notice to the other):  (i) to NMC, to the attention of General Counsel, or such other officer of NMC designated by NMC, at NMC’s principal executive offices; and (ii) to Casella, at his principal residence as set forth in the Company’s records.

24. Consents.  NMC hereby warrants and represents that (i) the execution and delivery of this Agreement and consummation of all transactions contemplated herein have been duly authorized in accordance with all corporate formalities and this Agreement and the obligations hereunder shall be binding on NMC and all of its subsidiaries and affiliates, as applicable, and (ii) the corporate officer executing this Agreement has been duly authorized to execute and deliver it.

7.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the dates set forth below.

Dated:  March 15, 2019	MICHAEL J. CASELLA
	/s/ Michael J. Casella

Dated:  March 15, 2019		NAVIGATORS MANAGEMENT COMPANY, INC.
	By:	/s/ Denise Lowsley
		Name: Denise Lowsley
		Title: Chief Human Resources Officer

8.

EX-11.1

Exhibit 11.1

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Computation of Per Share Earnings (Loss)

The following table presents the computation of Basic and Diluted Earnings (Loss) per Share for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
amounts in thousands, except per share amounts	2019			2018
Net Income (Loss)	$	(1,738	)	$	30,878
Basic Weighted Average Shares		29,871			29,595
Effect of Common Stock Equivalents:
Assumed Vesting of Stock Grants		—			542
Diluted Weighted Average Shares		29,871			30,137
Net Income (Loss) per Common Share:
Basic	$	(0.06	)	$	1.04
Diluted	$	(0.06	)	$	1.02
Anti-dilutive Shares Excluded from the Dilutive Computation		730			—

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: May 9, 2019	/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: May 9, 2019	/s/ Ciro M. DeFalco
	Name:	Ciro M. DeFalco
	Title:	Executive 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 March 31, 2019 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

May 9, 2019

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 March 31, 2019 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

Executive Vice President and Chief Financial Officer

May 9, 2019

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.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 26, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	NAVG
Entity Registrant Name	NAVIGATORS GROUP INC
Entity Central Index Key	0000793547
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		29,969,727
Entity Emerging Growth Company	false
Entity Small Business	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Investments:
Available-for-sale, at fair value	$ 3,167,095	$ 3,093,156
Equity Securities, at fair value (cost: 2019: $353,208; 2018: $361,418)	358,447	339,892
Other Invested Assets	52,274	48,406
Total Investments	3,577,816	3,481,454
Cash and Cash Equivalents	193,650	155,834
Restricted Cash and Cash Equivalents	47,525	66,320
Premiums Receivable	449,519	380,576
Prepaid Reinsurance Premiums	231,216	226,723
Reinsurance Recoverable on Paid Losses	133,371	118,259
Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses	830,732	820,189
Deferred Policy Acquisition Costs	171,465	158,080
Accrued Investment Income	23,793	22,168
Goodwill and Other Intangible Assets	26,724	27,146
Deferred Income Tax Asset	35,755	49,893
Right-of-Use Asset	44,615
Other Assets	90,102	96,807
Total Assets	5,856,283	5,603,449
Liabilities:
Reserves for Losses and Loss Adjustment Expenses	2,810,414	2,743,973
Unearned Premiums	1,191,609	1,102,735
Reinsurance Balances Payable	164,189	145,027
Senior Notes	264,095	264,052
Current Income Tax Payable, Net	346	1,594
Deferred Income Tax Liability	7,531	7,596
Lease Liability Obligation	53,616
Accounts Payable and Other Liabilities	134,100	151,622
Total Liabilities	4,625,900	4,416,599
Stockholders' Equity:
Preferred Stock ($.10 par value per share, authorized 1,000 shares, none issued)	0	0
Common Stock ($.10 par value per share, authorized 50,000 shares, issued 36,993 shares for 2019 and 36,805 shares for 2018)	3,696	3,678
Additional Paid-In Capital	375,331	378,274
Treasury Stock, at cost (7,023 shares for 2019 and 2018)	(155,801)	(155,801)
Retained Earnings	1,008,395	1,012,220
Accumulated Other Comprehensive Loss	(1,238)	(51,521)
Total Stockholders' Equity	1,230,383	1,186,850
Total Liabilities and Stockholders' Equity	5,856,283	5,603,449
Fixed Maturities
Investments:
Available-for-sale, at fair value	3,159,808	3,082,923
Short-Term Investments
Investments:
Available-for-sale, at fair value	$ 7,287	$ 10,233

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Amortized cost	$ 3,150,910	$ 3,135,647
Equity Securities, cost	$ 353,208	$ 361,418
Preferred Stock, par value	$ 0.10	$ 0.10
Preferred Stock, authorized shares	1,000,000	1,000,000
Preferred Stock, issued shares	0	0
Common Stock, par value	$ 0.10	$ 0.10
Common Stock, authorized shares	50,000,000	50,000,000
Common Stock, issued shares	36,993,000	36,805,000
Treasury Stock, shares	7,023,000	7,023,000
Fixed Maturities
Amortized cost	$ 3,143,622	$ 3,125,413
Short-Term Investments
Amortized cost	$ 7,288	$ 10,234

XML

Consolidated Statements of Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Gross Written Premiums	$ 580,976	$ 495,224
Revenues:
Net Written Premiums	461,667	393,262
Change in Unearned Premiums	(84,478)	(70,635)
Net Earned Premiums	377,189	322,627
Net Investment Income	28,219	23,702
Net Realized and Unrealized Gains (Losses):
Total Other-Than-Temporary Impairment Losses	(20)	(37)
Portion of Loss Recognized in Other Comprehensive Income	20	37
Net Other-Than-Temporary Impairment Losses Recognized in Earnings	0	0
Net Realized Gains on Investments Sold	393	1,169
Net Unrealized Gains (Losses) on Equity Securities	26,769	(3,181)
Total Net Realized and Unrealized Gains (Losses)	27,162	(2,012)
Other Loss	(4,272)	(117)
Total Revenues	428,298	344,200
Expenses:
Net Losses and Loss Adjustment Expenses	270,352	186,145
Commission Expenses	67,716	54,152
Other Operating Expenses	83,756	62,926
Merger Transaction Costs	850
Interest Expense	3,867	3,864
Total Expenses	426,541	307,087
Income Before Income Taxes	1,757	37,113
Income Tax Expense	3,495	6,235
Net Income (Loss)	$ (1,738)	$ 30,878
Net Income (Loss) per Common Share:
Basic	$ (0.06)	$ 1.04
Diluted	$ (0.06)	$ 1.02
Average common shares outstanding:
Basic	29,871	29,595
Diluted	29,871	30,137

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net Income (Loss)	$ (1,738)	$ 30,878
Change in Net Unrealized Gains (Losses) on Available-For-Sale Investments:
Unrealized Gains(Losses) on Investments arising during the period, net of Deferred Tax	46,289	(34,305)
Reclassification adjustment for Net Realized Gains (Losses) included in Net Income net of Deferred Tax	189	(1,733)
Change in Net Unrealized Gains (Losses) on Investments	46,478	(36,038)
Change in Other-Than-Temporary Impairments
Non Credit Other-Than-Temporary Impairments arising during the period, net of Deferred Tax	(16)	(30)
Reclassification Adjustment for Other-Than-Temporary Impairment Credit Losses Recognized in Net Income net of Deferred Tax	0	0
Change in Other-Than-Temporary Impairments	(16)	(30)
Change in Foreign Currency Translation Gains, net of Deferred Tax	3,821	2,228
Other Comprehensive Income (Loss)	50,283	(33,840)
Comprehensive Income (Loss)	$ 48,545	$ (2,962)

XML

Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Unrealized Gains (Losses) on Investments arising during the period, Deferred Tax	$ (12,167)	$ 9,623
Reclassification adjustment for Net Realized (Gains) Losses included in Net Income, Deferred Tax	(50)	509
Non Credit Other-Than-Temporary Impairments arising during the period, Deferred Tax	4	9
Reclassification Adjustment for Other-Than-Temporary Impairment Credit Losses Recognized in Net Income, Deferred Tax	0	0
Change in Foreign Currency Translation Gains (Losses), Deferred Tax	$ 120	$ (1,082)

XML

Consolidated Statement of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands		Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2017		$ 1,225,965	$ 3,650	$ 376,868	$ (155,801)	$ 981,380	$ 19,868
Beginning Balance (in shares) at Dec. 31, 2017			36,530		7,023
Net Income (Loss)		30,878				30,878
Dividends Declared		(2,069)				(2,069)
Changes in Other Comprehensive Income:
Change in Net Unrealized Gain (Loss) on Available-For-Sale Investments		(36,038)					(36,038)
Change in Net Non-Credit Other-Than- Temporary Impairment Losses		(30)					(30)
Change in Foreign Currency Translation Gain		2,228					2,228
Other Comprehensive Income (Loss)		(33,840)					(33,840)
Cumulative Effect of Adoption of ASU at January 1st, Net of Tax | ASU 2016-01						7,748	(7,748)
Cumulative Effect of Adoption of ASU at January 1st, Net of Tax | Accounting Standards Update 2018-02						(2,828)	2,828
Shares Issued	[1]	(4,968)	$ 20	(4,988)
Shares issued (in shares)	[1]		203
Share-Based Compensation		986		986
Ending Balance at Mar. 31, 2018		1,216,952	$ 3,670	372,866	$ (155,801)	1,015,109	(18,892)
Ending Balance (in shares) at Mar. 31, 2018			36,733		7,023
Beginning Balance at Dec. 31, 2018		$ 1,186,850	$ 3,678	378,274	$ (155,801)	1,012,220	(51,521)
Beginning Balance (in shares) at Dec. 31, 2018		36,805	36,805		7,023
Net Income (Loss)		$ (1,738)				(1,738)
Dividends Declared		(2,087)				(2,087)
Changes in Other Comprehensive Income:
Change in Net Unrealized Gain (Loss) on Available-For-Sale Investments		46,478					46,478
Change in Net Non-Credit Other-Than- Temporary Impairment Losses		(16)					(16)
Change in Foreign Currency Translation Gain		3,821					3,821
Other Comprehensive Income (Loss)		50,283					50,283
Shares Issued	[1]	(5,219)	$ 18	(5,237)
Shares issued (in shares)	[1]		188
Share-Based Compensation		2,294		2,294
Ending Balance at Mar. 31, 2019		$ 1,230,383	$ 3,696	$ 375,331	$ (155,801)	$ 1,008,395	$ (1,238)
Ending Balance (in shares) at Mar. 31, 2019		36,993	36,993		7,023

[1] Includes shares issued under the Second Amended and Restated 2005 Stock Incentive Plan to Directors, the Employee Stock Purchase Plan, and the impact of employee tax withholding on stock compensation.

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating Activities:
Net Income (Loss)	$ (1,738)	$ 30,878
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
Depreciation & Amortization	1,248	807
Amortization of Finite-Lived Intangible Assets	324	0
Share-Based Compensation	2,294	986
Deferred Income Taxes	1,798	(5)
Total Net Realized and Unrealized (Gains) Losses	(27,162)	2,012
Changes in Assets and Liabilities:
Reinsurance Recoverable on Paid and Unpaid Losses and Loss Adjustment Expenses	(25,738)	9,382
Reserves for Losses and Loss Adjustment Expenses	66,190	6,353
Prepaid Reinsurance Premiums	(4,478)	(237)
Unearned Premiums	88,976	70,755
Premiums Receivable	(69,570)	(61,403)
Deferred Policy Acquisition Costs	(13,368)	(16,328)
Accrued Investment Income	(1,614)	(1,247)
Reinsurance Balances Payable	19,132	(7,468)
Current Income Tax Receivable, Net	1,627	6,251
Other	(7,021)	(4,973)
Net Cash Provided by Operating Activities	30,900	35,763
Fixed Maturities
Redemptions and Maturities	71,665	175,867
Sales	83,768	110,089
Purchases	(174,872)	(246,359)
Equity Securities
Sales	9,579	14,989
Purchases	(1,991)	(36,799)
Net Sales and Purchases of Other Invested Assets	(4,039)	(4,585)
Net Sales, Maturities and Purchases of Short-Term Investments	907	22
Net Change in Unsettled Security Transactions	11,051	21,581
Net Purchase of Property and Equipment	(1,111)	(1,150)
Net Cash Provided by (Used in) Investing Activities	(5,043)	33,655
Financing Activities:
Proceeds from Employee Stock Purchase Plan	0	452
Payment of Employee Tax Withholding on Stock Compensation	(6,829)	(5,508)
Dividends Paid	(2,087)	(2,069)
Net Cash Used in Financing Activities	(8,916)	(7,125)
Effect of Exchange Rate on Unrestricted and Restricted Cash and Cash Equivalents	2,080	2,876
Change in Unrestricted and Restricted Cash and Cash Equivalents	19,021	65,169
Unrestricted and Restricted Cash and Cash Equivalents at Beginning of Year	222,154	158,964
Unrestricted and Restricted Cash and Cash Equivalents at End of Period	241,175	224,133
Supplemental Information:
Income Taxes Paid, Net	115	294
Interest Paid	0	0
Issuance of Stock to Directors	$ 745	$ 783

XML

Organization and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Organization and Summary of Significant Accounting Policies

NOTE 1. ORGANIZATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless the context requires otherwise, the terms “we,” “us,” “our” or “our Company” are used to mean The Navigators Group, Inc., a Delaware holding company established in 1982, and its subsidiaries. The term “Parent Company” is used to mean The Navigators Group, Inc. without its subsidiaries.

Organization

We are an international insurance company with a long-standing area of specialization in Marine insurance. We also offer Property and Casualty (“P&C”) insurance, primarily general liability coverage and umbrella & excess liability coverage to commercial enterprises through our Primary and Excess Casualty divisions. We have also developed niches in Professional Liability insurance, through our Directors & Officers (“D&O”) and Errors & Omissions (“E&O”) divisions, as well as assumed reinsurance products.

We operate through various wholly-owned insurance and service companies. Our subsidiaries domiciled in the United States (“U.S.”) include two insurance companies, Navigators Insurance Company (“NIC”) and Navigators Specialty Insurance Company (“NSIC”), as well as our U.S. underwriting agency, Navigators Management Company (“NMC”). NIC includes a branch in the United Kingdom (“U.K.”). We also have operations domiciled in the U.K., Hong Kong and Europe. Navigators International Insurance Company Ltd. (“NIIC”), Navigators Management (U.K.) Ltd. (“NMUK”) and Navigators Underwriting Ltd. (“NUL”) are domiciled in the U.K. and NUL includes European branches. Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency, manages and provides the capital, through Navigators Corporate Underwriters Ltd. (“NCUL”), for our Lloyd’s Syndicate 1221 (the “Syndicate”), and is also domiciled in the U.K. We control 100% of the Syndicate’s stamp capacity. We also control 100% of Navigators Holdings (Europe) NV, which has a 100% ownership interest in Bracht, Deckers & Mackelbert NV, an insurance underwriting agency organized under the laws of Belgium (“BDM”), Assurances Continentales – Continentale Verzekeringen NV, an insurance company licensed under the laws of Belgium (“ASCO”), and a wholly-owned subsidiary of ASCO, Canal Re S.A., a reinsurance company licensed under the laws of the Grand Duchy of Luxembourg (“Canal Re”). This group of three companies, which was acquired at the end of second quarter 2018, will be referred to as the “Navigators Insurance Companies of Europe Group” or “NICE Group.”

On August 22, 2018, our Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Hartford Financial Services Group, Inc. (“The Hartford”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford (the “Merger”). The Merger Agreement provides for the automatic extension of the outside date from May 1, 2019 to July 1, 2019 to allow the parties additional time to satisfy a mutual condition to closing relating to the receipt of all required regulatory approvals. As of May 1, 2019, the completion of the Merger remained subject to the approval of the New York State Department of Financial Services (the “NYDFS”) and the automatic extension has been triggered. The Company and The Hartford continue to pursue a timely approval of the change in control application with the NYDFS in order to complete the Merger as promptly as possible. Refer to Note 2 Merger for further information.

Basis of Presentation

The Consolidated Balance Sheet at March 31, 2019 and the Consolidated Statements of Income (Loss), Comprehensive Income (Loss), Stockholders’ Equity and Cash Flows for the periods ended March 31, 2019 and 2018 are unaudited. The Balance Sheet at December 31, 2018 is derived from our audited Financial Statements. The accompanying Interim Consolidated Financial Statements reflect all adjustments, which, in the opinion of management, are necessary to fairly present the results of our Company for the interim periods presented on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. 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 Interim Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018.

Income Taxes

The Company’s effective income tax rate is dependent on many factors, including the nature of many amounts, the mix of revenues and expenses between U.S. and foreign entities that are subject to income taxes at differing rates in various jurisdictions and changes in foreign operating locations in response to Brexit. Our Effective Tax Rate for the quarter differs from the federal tax rate of 21% primarily due to an increase in the valuation allowance against our Continental European business, partially offset by an excess tax benefit related to the vesting of stock compensation at fair market value.

New Accounting Standards Adopted in 2019

Leases

Effective January 1, 2019, our Company adopted ASU 2016-02, “Leases (Topic 842)” which provides a new comprehensive model for lease accounting. Topic 842 was subsequently amended by ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-11, Targeted Improvements; and ASU 2019-01, Codification Improvements. The new standard requires a lessee to recognize a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard requires a modified retrospective transition approach, which is applied to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We used an effective date of January 1, 2019 as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The new standard provides a number of optional practical expedients in transition. We elected the “package of practical expedients,” which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. The new standard also provides practical expedients for an entity’s ongoing accounting. We currently do not have any leases with a term shorter than 12 months. We also elected the practical expedient to not separate lease and non-lease components for certain classes of leases.

The adoption of the guidance resulted in the Company recognizing a ROU asset of $44.6 million and a lease liability of $53.6 million on the Consolidated Balance Sheet at March 31, 2019, with the difference attributable to contractual incentives contained within some of our leases as well as lease payment schedules that change over time resulting in deferred rent. The adoption of this guidance did not materially impact our results of operations, financial condition or liquidity.

Callable Debt Securities

Effective January 1, 2019, our Company adopted ASU 2017-08, “Premium Amortization on Purchased Callable Debt Securities” which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Significant Accounting Policies

There were no notable changes in our significant accounting policies subsequent to our Annual Report on Form 10-K for the year ended December 31, 2018.

XML

Merger

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Merger

NOTE 2. MERGER

On August 22, 2018, our Company entered into the Merger Agreement with The Hartford whereby, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford. Pursuant to the Merger Agreement, at the effective time of the Merger, holders of the Company’s common shares will be entitled to receive consideration of $70.00 in cash per common share (the “Merger Consideration”). The Merger Agreement provides for the automatic extension of the outside date from May 1, 2019 to July 1, 2019 to allow the parties additional time to satisfy a mutual condition to closing relating to the receipt of all required regulatory approvals. As of May 1, 2019, the completion of the Merger remained subject to the approval of the New York State Department of Financial Services (the “NYDFS”) and the automatic extension has been triggered. The Company and The Hartford continue to pursue a timely approval of the change in control application with the NYDFS in order to complete the Merger as promptly as possible.

The Merger Agreement contains various covenants of our Company and The Hartford. These covenants include interim operating covenants that, subject to certain exceptions, (i) require the Company to (1) conduct its business in all material respects in the ordinary course of business consistent with past practice, (2) use reasonable best efforts to preserve substantially intact, consistent with past practice, the Company’s business organization and (3) preserve, consistent with past practice, existing relations and goodwill with customers, producers, reinsurance providers, governmental authorities and other persons with whom the Company or its subsidiaries have significant business relationships, and (ii) restrict the Company’s ability to take certain actions prior to the effective time of the Merger without The Hartford’s consent (such consent, in certain cases, not to be unreasonably withheld, conditioned or delayed), which include, subject to certain exceptions, issuing additional common shares, incurring additional indebtedness, selling or purchasing material assets, making unbudgeted capital expenditures, making loans or investments (or disposing of investments) not permitted by the Company’s investment guidelines, increasing compensation other than in ordinary course, making material changes to accounting, underwriting, or reserving practices, making material tax elections, settling material litigation, or entering into, modifying or terminating material contracts.

XML

Segment Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Information

NOTE 3. SEGMENT INFORMATION

We report our results of operations consistent with the manner in which our Chief Operating Decision Maker reviews the business to assess performance through our reporting segments: U.S. Insurance, International Insurance (“Int’l Insurance”), Global Reinsurance (“GlobalRe”) and Corporate. 

We classify our business into three underwriting segments: U.S. Insurance, Int’l Insurance and GlobalRe. Both the U.S. Insurance and Int’l Insurance reporting segments are each comprised of three operating segments: Marine, P&C, and Professional Liability.

We evaluate the performance of each of the underwriting segments based on underwriting results. Underwriting results are measured based on Underwriting Profit or Loss and the related Combined Ratio, which are both measures of underwriting profitability. Underwriting Profit (Loss) is calculated from Net Earned Premiums less the sum of Net Losses and Loss Adjustment Expenses (“LAE”), Commission Expenses, Other Operating Expenses and Other Underwriting Income (Expense). The Combined Ratio is derived by dividing the sum of Net Losses and LAE, Commission Expenses, Other Operating Expenses and Other Underwriting 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. Our underwriting performance is evaluated separately from the rest of our operations.

The performance of our investment portfolios, our liquidity and capital resource needs, our foreign currency exposure and our tax planning strategies are evaluated on a consolidated basis within our Corporate segment. We do not allocate our assets by underwriting segment as we evaluate the underwriting results of these segments separately from the results of our investments portfolio.

Financial data by segment for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31, 2019
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross Written Premiums	$	291,967		$	156,129		$	132,880		$	—		$	580,976
Ceded Written Premiums		(73,795	)		(37,731	)		(7,783	)		—			(119,309	)
Net Written Premiums	$	218,172		$	118,398		$	125,097		$	—		$	461,667
Retention Ratio		74.7	%		75.8	%		94.1	%		—			79.5	%
Net Earned Premiums	$	202,037		$	108,913		$	66,239		$	—		$	377,189
Net Losses and LAE		(151,125	)		(75,458	)		(43,769	)		—			(270,352	)
Commission Expenses		(24,786	)		(26,447	)		(16,433	)		(50	)		(67,716	)
Other Operating Expenses		(43,210	)		(32,422	)		(8,124	)		—			(83,756	)
Other Underwriting Income (Expense)		95			1,034			(56	)		50			1,123
Underwriting Loss	$	(16,989	)	$	(24,380	)	$	(2,143	)	$	—		$	(43,512	)
Net Investment Income											28,219			28,219
Total Net Realized and Unrealized Gains											27,162			27,162
Interest Expense											(3,867	)		(3,867	)
Other Loss											(5,395	)		(5,395	)
Merger Transaction Costs											(850	)		(850	)
Income (Loss) Before Income Taxes	$	(16,989	)	$	(24,380	)	$	(2,143	)	$	45,269		$	1,757
Income Tax Expense											(3,495	)		(3,495	)
Net Loss													$	(1,738	)
Losses and LAE Ratio		74.8	%		69.3	%		66.1	%					71.7	%
Commission Expense Ratio		12.3	%		24.3	%		24.8	%					18.0	%
Other Operating Expense Ratio (2)		21.3	%		28.8	%		12.3	%					21.8	%
Combined Ratio		108.4	%		122.4	%		103.2	%					111.5	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Three Months Ended March 31, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross Written Premiums	$	239,928		$	127,872		$	127,424		$	—		$	495,224
Ceded Written Premiums		(66,581	)		(28,888	)		(6,493	)		—			(101,962	)
Net Written Premiums	$	173,347		$	98,984		$	120,931		$	—		$	393,262
Retention Ratio		72.2	%		77.4	%		94.9	%		—			79.4	%
Net Earned Premiums	$	172,913		$	93,210		$	56,504		$	—		$	322,627
Net Losses and LAE		(110,422	)		(45,843	)		(29,880	)		—			(186,145	)
Commission Expenses		(20,861	)		(19,756	)		(13,768	)		233			(54,152	)
Other Operating Expenses		(36,991	)		(20,530	)		(5,405	)		—			(62,926	)
Other Underwriting Income (Expense)		98			—			138			(233	)		3
Underwriting Profit	$	4,737		$	7,081		$	7,589		$	—		$	19,407
Net Investment Income											23,702			23,702
Total Net Realized and Unrealized Losses											(2,012	)		(2,012	)
Interest Expense											(3,864	)		(3,864	)
Other Loss											(120	)		(120	)
Income Before Income Taxes	$	4,737		$	7,081		$	7,589		$	17,706		$	37,113
Income Tax Expense											(6,235	)		(6,235	)
Net Income													$	30,878
Losses and LAE Ratio		63.9	%		49.2	%		52.9	%					57.7	%
Commission Expense Ratio		12.1	%		21.2	%		24.4	%					16.8	%
Other Operating Expense Ratio (2)		21.3	%		22.0	%		9.3	%					19.5	%
Combined Ratio		97.3	%		92.4	%		86.6	%					94.0	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

Revenue by operating segment for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31, 2019									Three Months Ended March 31, 2018									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			Net Written Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	47,801	$	(15,077	)	$	32,724	$	23,357	$	41,724	$	(17,480	)	$	24,244	$	21,092		14.6	%		(13.7	%)		35.0	%		10.7	%
P&C		207,802		(53,544	)		154,258		151,171		168,193		(44,912	)		123,281		127,590		23.5	%		19.2	%		25.1	%		18.5	%
ProfessionalLiability		36,364		(5,174	)		31,190		27,509		30,011		(4,189	)		25,822		24,231		21.2	%		23.5	%		20.8	%		13.5	%
Total	$	291,967	$	(73,795	)	$	218,172	$	202,037	$	239,928	$	(66,581	)	$	173,347	$	172,913		21.7	%		10.8	%		25.9	%		16.8	%
Int'l Insurance
Marine	$	54,861	$	(11,236	)	$	43,625	$	35,744	$	56,478	$	(8,054	)	$	48,424	$	39,279		(2.9	%)		39.5	%		(9.9	%)		(9.0	%)
P&C		58,567		(14,037	)		44,530		36,033		33,960		(13,667	)		20,293		21,769		72.5	%		2.7	%		119.4	%		65.5	%
Professional Liability		42,701		(12,458	)		30,243		37,136		37,434		(7,167	)		30,267		32,162		14.1	%		73.8	%		(0.1	%)		15.5	%
Total	$	156,129	$	(37,731	)	$	118,398	$	108,913	$	127,872	$	(28,888	)	$	98,984	$	93,210		22.1	%		30.6	%		19.6	%		16.8	%
GlobalRe	$	132,880	$	(7,783	)	$	125,097	$	66,239	$	127,424	$	(6,493	)	$	120,931	$	56,504		4.3	%		19.9	%		3.4	%		17.2	%
Total	$	580,976	$	(119,309	)	$	461,667	$	377,189	$	495,224	$	(101,962	)	$	393,262	$	322,627		17.3	%		17.0	%		17.4	%		16.9	%

XML

Investments

3 Months Ended

Mar. 31, 2019

Investments Debt And Equity Securities [Abstract]

Investments

NOTE 4.  INVESTMENTS

The following tables set forth our Company’s Available-For-Sale Investments as of March 31, 2019 and December 31, 2018 and include Other-Than-Temporary-Impairment (“OTTI”) securities recognized within Accumulated Other Comprehensive Income (“AOCI”):

	March 31, 2019
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	226,093	$	1,334	$	(3,050	)	$	227,809
States, Municipalities and Political Subdivisions		698,980		21,932		(586	)		677,634
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		329,582		1,106		(8,771	)		337,247
Residential Mortgage Obligations		154,149		1,538		(295	)		152,906
Asset-Backed Securities		532,027		1,746		(4,309	)		534,590
Commercial Mortgage-Backed Securities		199,450		2,089		(1,397	)		198,758
Subtotal	$	1,215,208	$	6,479	$	(14,772	)	$	1,223,501
Corporate Exposures (1)		1,019,527		12,910		(8,061	)		1,014,678
Total Fixed Maturities	$	3,159,808	$	42,655	$	(26,469	)	$	3,143,622
Short-Term Investments		7,287		—		(1	)		7,288
Total Available-For-Sale Investments	$	3,167,095	$	42,655	$	(26,470	)	$	3,150,910

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2018
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	239,776	$	901	$	(3,957	)	$	242,832
States, Municipalities and Political Subdivisions		646,551		10,734		(3,448	)		639,265
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		335,542		843		(13,118	)		347,817
Residential Mortgage Obligations		138,373		604		(530	)		138,299
Asset-Backed Securities		531,991		1,018		(8,040	)		539,013
Commercial Mortgage-Backed Securities		188,201		858		(2,816	)		190,159
Subtotal	$	1,194,107	$	3,323	$	(24,504	)	$	1,215,288
Corporate Exposures (1)		1,002,489		3,101		(28,640	)		1,028,028
Total Fixed Maturities	$	3,082,923	$	18,059	$	(60,549	)	$	3,125,413
Short-Term Investments		10,233		—		(1	)		10,234
Total Available-For-Sale Investments	$	3,093,156	$	18,059	$	(60,550	)	$	3,135,647

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

The following table sets forth our Company’s Equity Securities at fair value as of March 31, 2019 and December 31, 2018:

	As of March 31, 2019
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	181,512	$	11,495	$	(2,644	)	$	172,661
Preferred Stocks		176,935		2,082		(5,694	)		180,547
Total Equity Securities	$	358,447	$	13,577	$	(8,338	)	$	353,208

	December 31, 2018
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	166,353	$	4,738	$	(15,984	)	$	177,599
Preferred Stocks		173,539		511		(10,791	)		183,819
Total Equity Securities	$	339,892	$	5,249	$	(26,775	)	$	361,418

Our Company made investments in certain companies, which are reported as Other Invested Assets on the Consolidated Balance Sheet and accounted for using the equity method.  In applying the equity method, these investments were initially recorded at cost and subsequently adjusted based on our Company’s proportionate share of the net income or loss of the investments. Our initial purchase price for these investments was $2.0 million with a current carrying value of $1.9 million at March 31, 2019 and December 31, 2018, as reflected on our Consolidated Balance Sheet.  

Other Invested Assets also includes overseas deposits with a fair value of $50.4 million at March 31, 2019 and $46.5 million at December 31, 2018.  The overseas deposits consist of investments in private funds which are managed centrally by The Corporation of Lloyd’s in support of all Lloyd’s market participants. The funds consist of fixed income securities, bank deposits, and cash invested in local markets which are intended to fulfill regulatory deposit requirements in worldwide jurisdictions. Our Company’s ability to withdraw from the funds is restricted by an annual and quarterly funding and release process managed by Lloyd’s in conjunction with Syndicate 1221’s capital requirements in various jurisdictions.

As of March 31, 2019 and December 31, 2018, our Company did not have a concentration of greater than 5% of invested assets in a single non-government backed issuer.

As of March 31, 2019 and December 31, 2018, Fixed Maturities for which Non-Credit OTTI was previously recognized and included in AOCI were in a Net Unrealized Gain position of $0.3 million.

The fair value of our Company’s Fixed Maturities investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, foreign exchange rates and credit spreads. Our Company does not have the intent to sell nor is it more likely than not that it will have to sell Fixed Maturities 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. Our Company does not intend to sell, and it is more likely than not that our Company will not be required to sell, these securities before the recovery of the amortized cost basis. Our Company 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 our 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 Maturities categorized by the number of years until maturity as of March 31, 2019 are shown in the following table:

	March 31, 2019
	Fair		Amortized
amounts in thousands	Value		Cost
Due in one year or less	$	145,022	$	145,859
Due after one year through five years		805,156		802,331
Due after five years through ten years		372,917		362,404
Due after ten years		621,505		609,527
Mortgage-Backed and Asset-Backed Securities		1,215,208		1,223,501
Total	$	3,159,808	$	3,143,622

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. 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. Due to the periodic repayment of principal, our Mortgage-Backed and Asset-Backed Securities are estimated to have an effective maturity of approximately 5.1 years.

The following tables summarize all Available-For-Sale securities in a gross unrealized loss position as of March 31, 2019 and December 31, 2018, showing the aggregate fair value and gross unrealized loss by the length of time those securities have continuously been in a gross unrealized loss position:

	March 31, 2019
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	32,603	$	(377	)	$	121,784	$	(2,673	)	$	154,387	$	(3,050	)
States, Municipalities and Political Subdivisions		6,964		(4	)		76,493		(582	)		83,457		(586	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		2,924		(19	)		291,576		(8,752	)		294,500		(8,771	)
Residential Mortgage Obligations		35,368		(36	)		14,258		(259	)		49,626		(295	)
Asset-Backed Securities		266,463		(3,490	)		96,222		(819	)		362,685		(4,309	)
Commercial Mortgage-Backed Securities		55,185		(141	)		42,717		(1,256	)		97,902		(1,397	)
Subtotal	$	359,940	$	(3,686	)	$	444,773	$	(11,086	)	$	804,713	$	(14,772	)
Corporate Exposures (1)		35,038		(461	)		438,306		(7,600	)		473,344		(8,061	)
Total Fixed Maturities	$	434,545	$	(4,528	)	$	1,081,356	$	(21,941	)	$	1,515,901	$	(26,469	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2018
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	101,395	$	(2,486	)	$	112,195	$	(1,471	)	$	213,590	$	(3,957	)
States, Municipalities and Political Subdivisions		123,479		(1,274	)		105,405		(2,174	)		228,884		(3,448	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		34,819		(814	)		270,997		(12,304	)		305,816		(13,118	)
Residential Mortgage Obligations		70,965		(249	)		10,110		(281	)		81,075		(530	)
Asset-Backed Securities		345,437		(6,950	)		77,362		(1,090	)		422,799		(8,040	)
Commercial Mortgage-Backed Securities		58,877		(282	)		41,477		(2,534	)		100,354		(2,816	)
Subtotal	$	510,098	$	(8,295	)	$	399,946	$	(16,209	)	$	910,044	$	(24,504	)
Corporate Exposures (1)		481,057		(15,456	)		300,113		(13,184	)		781,170		(28,640	)
Total Fixed Maturities	$	1,216,029	$	(27,511	)	$	917,659	$	(33,038	)	$	2,133,688	$	(60,549	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Our Company analyzes impaired securities quarterly to determine if any impairments are other-than-temporary.  The above securities with unrealized losses are deemed to be temporarily impaired based on our evaluation.

As of March 31, 2019, there were 511 Fixed Maturities in an unrealized loss position. The gross unrealized losses for the greater than 12 months category consists primarily of Agency Mortgage-Backed Securities and Corporate Bonds due to an increase in interest rates.  The gross unrealized losses for the less than 12 months category consists primarily of Asset-Backed Securities due to a lower demand for floating rate securities. At December 31, 2018, there were 808 Fixed Maturities in an unrealized loss position. In the above table, the gross unrealized loss for the greater than 12 months category consists primarily of Agency Residential Mortgage-Backed Securities and Hybrid bonds and Redeemable Preferred stocks, which are reported in Corporate Exposures, and is mostly due to an increase in interest rates and spread widening.  The gross unrealized loss for the less than 12 months category consists primarily of Hybrid bonds and Redeemable Preferred stocks, which are reported in Corporate Exposures, and Asset-Backed Securities mainly due to spread widening.      

As of March 31, 2019 and December 31, 2018, the largest unrealized loss by a non-government backed issuer in the investment portfolio was $1.8 million and $3.7 million, respectively.

Our Company’s ability to hold securities is supported by sufficient cash flow from our operations and from maturities within our investment portfolio in order to meet our claims payments and other disbursement obligations arising from our 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.  

Our Company did not have any credit related OTTI losses during the three months ended March 31, 2019 and 2018.

As of March 31, 2019 and 2018, the cumulative amounts related to our Company’s credit loss portion of the OTTI losses on Fixed Maturities was $2.3 million and $2.4 million, respectively.    

Our Company’s Net Investment Income was derived from the following sources:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Fixed Maturities	$	25,015		$	21,052
Equity Securities		3,155			2,925
Short-Term Investments, Cash & Cash Equivalents		570			227
Other Invested Assets		228			186
Total Investment Income	$	28,968		$	24,390
Investment Expenses		(749	)		(688	)
Net Investment Income	$	28,219		$	23,702

Realized Gains and Losses on Investments Sold, excluding net OTTI losses recognized in earnings, for the periods indicated, were as follows:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Fixed Maturities:
Gains	$	784		$	1,806
Losses		(265	)		(275	)
Fixed Maturities, Net	$	519		$	1,531
Short-Term Investments, Cash & Cash Equivalents:
Gains	$	—		$	18
Losses		(17	)		(174	)
Short-Term, Net	$	(17	)	$	(156	)
Other Invested Assets:
Gains	$	134		$	50
Losses		—			(41	)
Other Invested Assets, Net	$	134		$	9
Equity Securities:
Gains	$	3		$	—
Losses		(246	)		(215	)
Equity Securities, Net	$	(243	)	$	(215	)
Net Realized Gains on Investments Sold	$	393		$	1,169

The following table presents the portion of Net Unrealized Gains (Losses) that relates to Equity Securities recognized during the three months ended March 31, 2018 and 2019:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Equity Securities:
Total Net Realized and Unrealized Gains (Losses) recognized	$	26,526		$	(3,396	)
Less: Net Realized Losses on Investments Sold		(243	)		(215	)
Net Unrealized Gains (Losses) recognized	$	26,769		$	(3,181	)

XML

Fair Value Measurement

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurement

NOTE 5. FAIR VALUE MEASUREMENT

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

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed equities 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 our 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 following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements described above, our Company’s Fixed Maturities and Equity Securities by asset class that are measured at fair value on a recurring basis, as well as the fair value of the 5.75% Senior Notes due October 15, 2023 (the “Senior Notes”) carried at amortized cost as of March 31, 2019 and December 31, 2018:

	March 31, 2019
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	26,308	$	199,785	$	—	$	226,093
States, Municipalities and Political Subdivisions		—		698,980		—		698,980
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		329,582		—		329,582
Residential Mortgage Obligations		—		154,149		—		154,149
Asset-Backed Securities		—		532,027		—		532,027
Commercial Mortgage-Backed Securities		—		199,450		—		199,450
Subtotal	$	—	$	1,215,208	$	—	$	1,215,208
Corporate Exposures		—		1,019,527		—		1,019,527
Total Fixed Maturities	$	26,308	$	3,133,500	$	—	$	3,159,808
Equity Securities:
Common Stocks	$	34,678	$	146,834	$	—	$	181,512
Preferred Stocks		—		176,935		—		176,935
Total Equity Securities	$	34,678	$	323,769	$	—	$	358,447
Short-Term Investments		—		7,287		—		7,287
Total Assets Measured at Fair Value	$	60,986	$	3,464,556	$	—	$	3,525,542
Senior Notes	$	—	$	283,554	$	—	$	283,554
Total Liabilities Measured at Fair Value	$	—	$	283,554	$	—	$	283,554

	December 31, 2018
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	35,537	$	204,239	$	—	$	239,776
States, Municipalities and Political Subdivisions		—		646,551		—		646,551
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		335,542		—		335,542
Residential Mortgage Obligations		—		138,373		—		138,373
Asset-Backed Securities		—		531,991		—		531,991
Commercial Mortgage-Backed Securities		—		188,201		—		188,201
Subtotal	$	—	$	1,194,107	$	—	$	1,194,107
Corporate Exposures		—		1,002,489		—		1,002,489
Total Fixed Maturities	$	35,537	$	3,047,386	$	—	$	3,082,923
Equity Securities:
Common Stocks	$	35,029	$	131,324	$	—	$	166,353
Preferred Stocks		—		173,539		—		173,539
Total Equity Securities	$	35,029	$	304,863	$	—	$	339,892
Short-Term Investments		—		10,233		—		10,233
Total Assets Measured at Fair Value	$	70,566	$	3,362,482	$	—	$	3,433,048
Senior Notes	$	—	$	278,150	$	—	$	278,150
Total Liabilities Measured at Fair Value	$	—	$	278,150	$	—	$	278,150

Other financial assets and liabilities including Cash, Premium Receivable, Reinsurance Recoverable and Reinsurance Balances Payable are carried at cost, which approximates fair value. Our Company has overseas deposits in Other Invested Assets of $50.4 million and $46.5 million at March 31, 2019 and December 31, 2018, respectively, which is measured at fair value using the net asset value (“NAV”) as a practical expedient.

Our Company did not have any transfers between Level 1 and Level 2 classifications for the three months ended March 31, 2019. 

As of March 31, 2019, our Company did not have any Level 3 assets.

XML

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

The Company had goodwill and other intangible assets of $26.7 million and $27.1 million at March 31, 2019 and December 31, 2018, respectively.

Goodwill

The following table shows an analysis of goodwill by reporting segment:

	Three Months Ended March 31, 2019
	U.S.		Int'l
amounts in thousands	Insurance		Insurance			Total
Goodwill at Beginning of the Period	$	1,978	$	14,840		$	16,818
Foreign Currency Translation Adjustment		—		(31	)		(31	)
Goodwill at End of the Period	$	1,978	$	14,809		$	16,787

Intangibles

The gross carrying value, accumulated amortization, and weighted average amortization period of intangible assets by type at March 31, 2019 was as follows:

	As of March 31, 2019
amounts in thousands	Gross Carrying Amount		Accumulated Amortization			Weighted Average Amortization Period
Finite-Lived Assets
ASCO Customer Relationships	$	3,260	$	(245	)	10 years
ASCO VOBA		1,649		(309	)	4 years
BDM Broker Networks		976		(49	)	15 years
BDM Trade Name		480		(360	)	1 year
Total	$	6,365	$	(963	)
Indefinite-Lived Assets
ASCO European Licenses	$	2,399	indefinite
NUAL Lloyd's Syndicate Capacity		2,136	indefinite
Total	$	4,535

The amortization of the Finite-Lived Assets was recognized within Other Operating Expenses on our Consolidated Statements of Income (Loss) with the exception of the amortization of the value of business acquired (“VOBA”) asset, which was recognized within Commission Expenses.

XML

Loss Reserves

3 Months Ended

Mar. 31, 2019

Insurance [Abstract]

Loss Reserves

NOTE 7. LOSS RESERVES

We establish reserves for the estimated unpaid ultimate liability for losses and LAE under the terms of our policies and agreements. The determination of Reserves for Losses and LAE is partially dependent upon the receipt of information from agents and brokers. Reserves include estimates for both claims that have been reported and for those that have been incurred but not reported (“IBNR”), and include estimates of expenses associated with processing and settling these claims. Reserves are recorded in Reserves for Losses and LAE in the Consolidated Balance Sheets. Our estimates and judgments may be revised as additional experience and other data become available and are reviewed, as new or improved methodologies are developed, or as laws change. Frequency/severity analyses are also performed for certain books of business. To the extent that reserves are found deficient or redundant, a strengthening or release is recognized as a charge or credit to earnings.

The following table summarizes our Company’s Reserves for Losses and LAE activity for the three months ended March 31, 2019 and 2018:

	For the Three Months Ended March 31,
amounts in thousands	2019			2018
Net Reserves for Losses and LAE at Beginning of Year	$	1,923,784		$	1,705,380
Provision for Losses and LAE for Claims Occurring in the Current Year		218,029			184,179
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years		52,323			1,966
Incurred Losses and LAE	$	270,352		$	186,145
Losses and LAE Paid for Claims Occurring During:
Current Year		(19,251	)		(9,206	)
Prior Years		(203,287	)		(155,860	)
Losses and LAE Payments	$	(222,538	)	$	(165,066	)
Foreign Currency Adjustment		8,084			4,980
Net Reserves for Losses and LAE at End of Period		1,979,682			1,731,439
Reinsurance Recoverables on Unpaid Losses and LAE		830,732			790,388
Gross Reserves for Losses and LAE at End of Period	$	2,810,414		$	2,521,827

For the three months ended March 31, 2019, our Incurred Losses and LAE increased $84.2 million as compared to the same period in 2018, driven by a $50.4 million increase in net prior AY reserve strengthening, as well as an increase due to growth in Net Earned Premium over the prior year including the impact of additional premium from the NICE Group which was acquired at the end of second quarter 2018.

For the three months ended March 31, 2019, we recognized total net catastrophe losses of $2.0 million, including a loss from the Russian River Flood in California.  This compared to no catastrophe losses for the same period in 2018.

For the three months ended March 31, 2019, we recognized $52.3 million of net prior AY reserve strengthening, including the following:

• $26.6 million from our U.S. Insurance reporting segment driven by $23.4 million of strengthening within Marine mostly related to an increase in our IBNR provision for run-off business for accident years prior to 1988 within our Marine Liability product line, $2.2 million in Professional Liability driven by unfavorable loss emergence on our Real Estate product, and $1.0 million in P&C due to unfavorable loss emergence in our Primary Casualty and Property divisions, partially offset by favorable loss emergence in our Commercial Excess Casualty and Environmental business lines.

• $16.8 million from our Int’l Insurance reporting segment driven by $15.6 million of strengthening within Professional Liability mostly related to large loss activity within our D&O division and $2.0 million within Marine primarily due to loss development on net prior AY catastrophe losses.  This reserve strengthening was partially offset by $0.8 million of release within our P&C operating segment, mostly due to favorable loss emergence on net prior AY catastrophe losses.

• $8.9 million from our GlobalRe reporting segment driven by $5.6 million and $5.3 million of strengthening within our Specialty Casualty and P&C products, respectively, related to unfavorable loss emergence, as well as development on net prior AY catastrophe losses within P&C, and $1.0 million of strengthening within Marine due to loss development. This reserve strengthening was partially offset by $3.0 million of net prior AY reserve release within our Surety product due to favorable loss emergence.

For the three months ended March 31, 2019, our Losses and LAE Payments increased $57.5 million as compared to the same period in 2018, primarily due to increased claim payments associated with growth in our business.

Our March 31, 2019 Net Reserves for Losses and LAE includes estimated amounts for numerous catastrophe events. We caution that the magnitude and complexity of losses arising from these events inherently increases the level of uncertainty and therefore the level of management judgment involved in arriving at our estimated Net Reserves for Losses and LAE. As a result, our actual losses for these events may ultimately differ materially from our current estimates.  

XML

Ceded Reinsurance

3 Months Ended

Mar. 31, 2019

Insurance [Abstract]

Ceded Reinsurance

NOTE 8. CEDED REINSURANCE

As of March 31, 2019, the credit quality distribution of our Company’s reinsurance recoverable of $1.2 billion for ceded paid losses, ceded unpaid losses and LAE, and ceded unearned premiums based on insurer financial strength ratings from A.M. Best or S&P was not significantly different from the credit quality distribution as of December 31, 2018.

Our allowance for uncollectible reinsurance was $13.4 million as of March 31, 2019 and December 31, 2018.

As of March 31, 2019, the list of our 10 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and LAE and ceded unearned premium, together with the reinsurance recoverable and collateral, was similar to the list as of December 31, 2018.

XML

Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

NOTE 9. LEASES

The Company enters into lease agreements for real estate which is primarily used for office facilities in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. See Note 1 Organization & Summary of Significant Accounting Policies for additional information regarding the accounting for leases.

Certain of our European operating real estate leases contain variable lease payments which are based on indexes of the respective countries. Most leases include an option to extend or renew the lease term. The exercise of the renewal option is at our discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if we are reasonably certain of exercising those options. In determining the present value of lease payments, we utilize the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

Rent expense is included in Other Operating Expenses in the Consolidated Statement of Income (Loss). Additional information regarding the Company’s real estate operating leases is as follows:

amounts in thousands	Three Months Ended March 31, 2019
Lease cost
Operating leases	$	2,121
Variable leases		2
Total lease cost	$	2,123
Other information on operating leases
Cash payments included in the measurement of lease liabilities reported in operating cash flows	$	2,459
Weighted average discount rate		2.97	%
Weighted average remaining lease term in years	7.2 years

The following table presents the contractual maturities of the Company's lease liabilities:

amounts in thousands	Real Estate Lease Liability
Remainder of 2019	$	7,480
2020		9,818
2021		8,985
2022		8,090
2023		7,344
Thereafter		15,869
Total undiscounted lease base rent payments		57,586
Less: present value adjustment		3,970
Operating lease liability	$	53,616

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 10. COMMITMENTS AND CONTINGENCIES

In 2013, the State of Connecticut (“the State”) awarded our Company up to $11.5 million ($8.0 million in loans and $3.5 million in grants) to move our corporate headquarters to Stamford, Connecticut. The loan is non-interest bearing, has a term of 10 years and is subject to forgiveness based on our compliance with certain conditions set forth in the agreement with the State. The amount of the loan to be received and forgiven is dependent on our Company reaching certain milestones for creation and retention of new jobs over a five-year period, and the funds are to be used to offset certain equipment purchases, facility costs, training of employees and other eligible project-related costs. As of March 31, 2019, our Company has received all of the award and earned a loan forgiveness credit of $7.0 million with the State. Our Company is recognizing the amount of loan and grants received over the period in which offsetting expenses are recognized. Our Company recognized $0.3 million and $0.4 million of the incentive for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019 and December 31, 2018, our Company has deferred revenue of $4.4 million and $4.7 million, respectively, which is included in Other Liabilities on the Consolidated Balance Sheets.

On February 16, 2017, our Company entered into a guarantee, pursuant to which it guaranteed all of the liabilities and obligations of NIIC (the “Guarantee”). The Guarantee will remain effective until all of such liabilities and obligations are discharged, and in the event that our Company does not meet its obligations under the Guarantee, any person who is covered by an insurance policy, certificate of coverage or reinsurance contract issued by NIIC will be a third party beneficiary under the Guarantee. Our Company’s obligations under the Guarantee may be terminated by providing twelve months prior written notice to NIIC. However the obligations of our Company under the Guarantee terminate immediately in the event that (i) the majority of the outstanding voting capital stock in NIIC is sold to any non-affiliated entity; (ii) A.M. Best has confirmed that NIIC will receive the same financial strength rating as NIC or NSIC, without the benefit of the Guarantee; or (iii) NIIC withdraws its request to be rated by A.M. Best, provided that NIIC has not been downgraded within the prior twelve months.

On August 22, 2018, our Company entered into a Merger Agreement with The Hartford. In accordance with the terms of the Merger Agreement, our Company would be obligated to pay The Hartford a $68.25 million termination fee if the Merger Agreement is terminated for certain reasons outlined in the Merger Agreement.

In the ordinary course of conducting business, our Parent Company’s subsidiaries are involved in various legal proceedings. Most of these proceedings consist of claims litigation involving our Parent 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. In general, our Company believes we have valid defenses to these cases. Our Company’s management believes that the ultimate liability, if any, with respect to these legal proceedings, after consideration of provisions made for potential losses and cost of defense, will not be material to our Company’s Consolidated Balance Sheets, Statements of Income and Statements of Cash Flows.

XML

Stock-Based Compensation

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

NOTE 11. STOCK-BASED COMPENSATION

Stock-based compensation granted under our Company’s stock plans is expensed in tranches over the vesting period. Non-performance based grants of restricted stock units generally vest equally over a three or four-year period. Performance units generally cliff vest three years after they are granted. During the first quarter of 2019, awards were granted as restricted stock units which cliff vest three years after the grant date.

Each performance unit and restricted stock unit represents a contingent right to receive one share of Common Stock as of the vesting date. Such Common Stock may be subject to forfeiture for the payment of any required tax withholding.

The activity related to our Company's restricted stock unit awards was as follows:

	Three Months Ended March 31, 2019
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		86,589		$	49.45
Granted		191,713			69.76
Vested (2)		(14,849	)		46.51
Forfeited		(8,250	)		48.74
Nonvested at the end of the period		255,203		$	64.90

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the three months ended March 31, 2019 share awards of 6,043 were withheld for tax payments at a weighted average vest date fair value of $69.62.

Restricted stock unit awards that remain outstanding at the time of the Merger will be treated as follows in accordance with the Merger Agreement:

Each tranche of the restricted stock unit awards that remains outstanding at the time of the Merger that are scheduled to vest prior to January 1, 2020 will be converted into a right to receive an amount in cash equal to the product of (a) the Merger Consideration multiplied by (b) the number of restricted stock unit in the applicable tranche, and will vest upon the Merger.

Each tranche of the restricted stock unit awards that remains outstanding at the time of the Merger that are scheduled to vest on or after January 1, 2020 and was granted prior to January 1, 2019 will be cancelled and converted into a right to receive an amount in cash equal to the product of (a) the Merger Consideration multiplied by (b) the number of restricted stock units in the applicable tranche, and will vest pursuant to the existing vesting schedule.

Each tranche of the restricted stock unit awards that remains outstanding at the time of the Merger that was granted on or after January 1, 2019 will be cancelled and converted into the right to receive a number of restricted stock units issued by The Hartford equal to (a) the Merger Consideration multiplied by the number of restricted stock units in the applicable tranche, divided by (b) the closing price of a share of The Hartford common stock on the business day immediately prior to the Merger, and will vest pursuant to the existing vesting schedule.

The activity related to our Company's performance-based equity awards was as follows:

	Three Months Ended March 31, 2019
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		845,533		$	48.86
Granted		—			—
Performance Adjustment		(96,448	)		40.57
Vested (2)		(247,448	)		40.70
Forfeited		(27,000	)		51.27
Nonvested at the end of the period		474,637		$	54.66

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the three months ended March 31, 2019 share awards of 98,558 were withheld for tax payments at a weighted average vest date fair value of $69.78.

Performance unit awards that remain outstanding at the time of the Merger will be treated as follows in accordance with the Merger Agreement:

Each performance unit award granted prior to January 1, 2017 that remains outstanding at the time of the Merger will be converted into a right to receive an amount in cash equal to the product of (a) the Merger Consideration multiplied by (b) the target performance units granted and will vest upon the Merger.

Each performance unit award granted on or after January 1, 2017 and prior to January 1, 2019 that remains outstanding at the time of the Merger will be cancelled and converted into a right to receive an amount in cash equal to the product of (a) the Merger Consideration multiplied by (b) the target performance units granted, and will vest pursuant to the existing vesting schedule.

XML

Stockholders Equity

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Stockholders' Equity

NOTE 12. STOCKHOLDERS’ EQUITY

On February 14, 2019 our Board of Directors declared a cash dividend of $0.07 per share that was paid on March 11, 2019. During the three months ended March 31, 2018, a dividend of $0.07 per share was declared and paid.

XML

Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

NOTE 13. SUBSEQUENT EVENTS

Merger

The Merger Agreement provides for the automatic extension of the outside date from May 1, 2019 to July 1, 2019 to allow the parties additional time to satisfy a mutual condition to closing relating to the receipt of all required regulatory approvals. As of May 1, 2019, the completion of the Merger remained subject to the approval of the New York State Department of Financial Services (the “NYDFS”) and the automatic extension has been triggered. The Company and The Hartford continue to pursue a timely approval of the change in control application with the NYDFS in order to complete the Merger as promptly as possible.

Income Taxes

Subsequent to March 31, 2019, the Company entered into an agreement to settle an uncertain tax position with the Internal Revenue Service related to foreign tax credits for years 2014, 2015 and 2016. The settlement resulted in a decrease to unrecognized tax benefits of $6.4 million.

Cash Dividend Declared

On May 9, 2019, our Board of Directors declared a cash dividend on our Company’s Common Stock of $0.07 per share, payable on June 4, 2019 to stockholders of record on May 20, 2019.

XML

Organization and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Organization

Organization

We are an international insurance company with a long-standing area of specialization in Marine insurance. We also offer Property and Casualty (“P&C”) insurance, primarily general liability coverage and umbrella & excess liability coverage to commercial enterprises through our Primary and Excess Casualty divisions. We have also developed niches in Professional Liability insurance, through our Directors & Officers (“D&O”) and Errors & Omissions (“E&O”) divisions, as well as assumed reinsurance products.

We operate through various wholly-owned insurance and service companies. Our subsidiaries domiciled in the United States (“U.S.”) include two insurance companies, Navigators Insurance Company (“NIC”) and Navigators Specialty Insurance Company (“NSIC”), as well as our U.S. underwriting agency, Navigators Management Company (“NMC”). NIC includes a branch in the United Kingdom (“U.K.”). We also have operations domiciled in the U.K., Hong Kong and Europe. Navigators International Insurance Company Ltd. (“NIIC”), Navigators Management (U.K.) Ltd. (“NMUK”) and Navigators Underwriting Ltd. (“NUL”) are domiciled in the U.K. and NUL includes European branches. Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency, manages and provides the capital, through Navigators Corporate Underwriters Ltd. (“NCUL”), for our Lloyd’s Syndicate 1221 (the “Syndicate”), and is also domiciled in the U.K. We control 100% of the Syndicate’s stamp capacity. We also control 100% of Navigators Holdings (Europe) NV, which has a 100% ownership interest in Bracht, Deckers & Mackelbert NV, an insurance underwriting agency organized under the laws of Belgium (“BDM”), Assurances Continentales – Continentale Verzekeringen NV, an insurance company licensed under the laws of Belgium (“ASCO”), and a wholly-owned subsidiary of ASCO, Canal Re S.A., a reinsurance company licensed under the laws of the Grand Duchy of Luxembourg (“Canal Re”). This group of three companies, which was acquired at the end of second quarter 2018, will be referred to as the “Navigators Insurance Companies of Europe Group” or “NICE Group.”

On August 22, 2018, our Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Hartford Financial Services Group, Inc. (“The Hartford”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford (the “Merger”). The Merger Agreement provides for the automatic extension of the outside date from May 1, 2019 to July 1, 2019 to allow the parties additional time to satisfy a mutual condition to closing relating to the receipt of all required regulatory approvals. As of May 1, 2019, the completion of the Merger remained subject to the approval of the New York State Department of Financial Services (the “NYDFS”) and the automatic extension has been triggered. The Company and The Hartford continue to pursue a timely approval of the change in control application with the NYDFS in order to complete the Merger as promptly as possible. Refer to Note 2 Merger for further information.

Basis of Presentation

Basis of Presentation

The Consolidated Balance Sheet at March 31, 2019 and the Consolidated Statements of Income (Loss), Comprehensive Income (Loss), Stockholders’ Equity and Cash Flows for the periods ended March 31, 2019 and 2018 are unaudited. The Balance Sheet at December 31, 2018 is derived from our audited Financial Statements. The accompanying Interim Consolidated Financial Statements reflect all adjustments, which, in the opinion of management, are necessary to fairly present the results of our Company for the interim periods presented on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. 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 Interim Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018.

Income Taxes

Income Taxes

The Company’s effective income tax rate is dependent on many factors, including the nature of many amounts, the mix of revenues and expenses between U.S. and foreign entities that are subject to income taxes at differing rates in various jurisdictions and changes in foreign operating locations in response to Brexit. Our Effective Tax Rate for the quarter differs from the federal tax rate of 21% primarily due to an increase in the valuation allowance against our Continental European business, partially offset by an excess tax benefit related to the vesting of stock compensation at fair market value.

New Accounting Standards Adopted in 2019

New Accounting Standards Adopted in 2019

Leases

Effective January 1, 2019, our Company adopted ASU 2016-02, “Leases (Topic 842)” which provides a new comprehensive model for lease accounting. Topic 842 was subsequently amended by ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-11, Targeted Improvements; and ASU 2019-01, Codification Improvements. The new standard requires a lessee to recognize a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard requires a modified retrospective transition approach, which is applied to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We used an effective date of January 1, 2019 as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The new standard provides a number of optional practical expedients in transition. We elected the “package of practical expedients,” which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. The new standard also provides practical expedients for an entity’s ongoing accounting. We currently do not have any leases with a term shorter than 12 months. We also elected the practical expedient to not separate lease and non-lease components for certain classes of leases.

The adoption of the guidance resulted in the Company recognizing a ROU asset of $44.6 million and a lease liability of $53.6 million on the Consolidated Balance Sheet at March 31, 2019, with the difference attributable to contractual incentives contained within some of our leases as well as lease payment schedules that change over time resulting in deferred rent. The adoption of this guidance did not materially impact our results of operations, financial condition or liquidity.

Callable Debt Securities

Effective January 1, 2019, our Company adopted ASU 2017-08, “Premium Amortization on Purchased Callable Debt Securities” which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Significant Accounting Policies

Significant Accounting Policies

There were no notable changes in our significant accounting policies subsequent to our Annual Report on Form 10-K for the year ended December 31, 2018.

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Financial Data by Segment

Financial data by segment for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31, 2019
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross Written Premiums	$	291,967		$	156,129		$	132,880		$	—		$	580,976
Ceded Written Premiums		(73,795	)		(37,731	)		(7,783	)		—			(119,309	)
Net Written Premiums	$	218,172		$	118,398		$	125,097		$	—		$	461,667
Retention Ratio		74.7	%		75.8	%		94.1	%		—			79.5	%
Net Earned Premiums	$	202,037		$	108,913		$	66,239		$	—		$	377,189
Net Losses and LAE		(151,125	)		(75,458	)		(43,769	)		—			(270,352	)
Commission Expenses		(24,786	)		(26,447	)		(16,433	)		(50	)		(67,716	)
Other Operating Expenses		(43,210	)		(32,422	)		(8,124	)		—			(83,756	)
Other Underwriting Income (Expense)		95			1,034			(56	)		50			1,123
Underwriting Loss	$	(16,989	)	$	(24,380	)	$	(2,143	)	$	—		$	(43,512	)
Net Investment Income											28,219			28,219
Total Net Realized and Unrealized Gains											27,162			27,162
Interest Expense											(3,867	)		(3,867	)
Other Loss											(5,395	)		(5,395	)
Merger Transaction Costs											(850	)		(850	)
Income (Loss) Before Income Taxes	$	(16,989	)	$	(24,380	)	$	(2,143	)	$	45,269		$	1,757
Income Tax Expense											(3,495	)		(3,495	)
Net Loss													$	(1,738	)
Losses and LAE Ratio		74.8	%		69.3	%		66.1	%					71.7	%
Commission Expense Ratio		12.3	%		24.3	%		24.8	%					18.0	%
Other Operating Expense Ratio (2)		21.3	%		28.8	%		12.3	%					21.8	%
Combined Ratio		108.4	%		122.4	%		103.2	%					111.5	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Three Months Ended March 31, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross Written Premiums	$	239,928		$	127,872		$	127,424		$	—		$	495,224
Ceded Written Premiums		(66,581	)		(28,888	)		(6,493	)		—			(101,962	)
Net Written Premiums	$	173,347		$	98,984		$	120,931		$	—		$	393,262
Retention Ratio		72.2	%		77.4	%		94.9	%		—			79.4	%
Net Earned Premiums	$	172,913		$	93,210		$	56,504		$	—		$	322,627
Net Losses and LAE		(110,422	)		(45,843	)		(29,880	)		—			(186,145	)
Commission Expenses		(20,861	)		(19,756	)		(13,768	)		233			(54,152	)
Other Operating Expenses		(36,991	)		(20,530	)		(5,405	)		—			(62,926	)
Other Underwriting Income (Expense)		98			—			138			(233	)		3
Underwriting Profit	$	4,737		$	7,081		$	7,589		$	—		$	19,407
Net Investment Income											23,702			23,702
Total Net Realized and Unrealized Losses											(2,012	)		(2,012	)
Interest Expense											(3,864	)		(3,864	)
Other Loss											(120	)		(120	)
Income Before Income Taxes	$	4,737		$	7,081		$	7,589		$	17,706		$	37,113
Income Tax Expense											(6,235	)		(6,235	)
Net Income													$	30,878
Losses and LAE Ratio		63.9	%		49.2	%		52.9	%					57.7	%
Commission Expense Ratio		12.1	%		21.2	%		24.4	%					16.8	%
Other Operating Expense Ratio (2)		21.3	%		22.0	%		9.3	%					19.5	%
Combined Ratio		97.3	%		92.4	%		86.6	%					94.0	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

Revenue by Operating Segment

Revenue by operating segment for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31, 2019									Three Months Ended March 31, 2018									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			Net Written Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	47,801	$	(15,077	)	$	32,724	$	23,357	$	41,724	$	(17,480	)	$	24,244	$	21,092		14.6	%		(13.7	%)		35.0	%		10.7	%
P&C		207,802		(53,544	)		154,258		151,171		168,193		(44,912	)		123,281		127,590		23.5	%		19.2	%		25.1	%		18.5	%
ProfessionalLiability		36,364		(5,174	)		31,190		27,509		30,011		(4,189	)		25,822		24,231		21.2	%		23.5	%		20.8	%		13.5	%
Total	$	291,967	$	(73,795	)	$	218,172	$	202,037	$	239,928	$	(66,581	)	$	173,347	$	172,913		21.7	%		10.8	%		25.9	%		16.8	%
Int'l Insurance
Marine	$	54,861	$	(11,236	)	$	43,625	$	35,744	$	56,478	$	(8,054	)	$	48,424	$	39,279		(2.9	%)		39.5	%		(9.9	%)		(9.0	%)
P&C		58,567		(14,037	)		44,530		36,033		33,960		(13,667	)		20,293		21,769		72.5	%		2.7	%		119.4	%		65.5	%
Professional Liability		42,701		(12,458	)		30,243		37,136		37,434		(7,167	)		30,267		32,162		14.1	%		73.8	%		(0.1	%)		15.5	%
Total	$	156,129	$	(37,731	)	$	118,398	$	108,913	$	127,872	$	(28,888	)	$	98,984	$	93,210		22.1	%		30.6	%		19.6	%		16.8	%
GlobalRe	$	132,880	$	(7,783	)	$	125,097	$	66,239	$	127,424	$	(6,493	)	$	120,931	$	56,504		4.3	%		19.9	%		3.4	%		17.2	%
Total	$	580,976	$	(119,309	)	$	461,667	$	377,189	$	495,224	$	(101,962	)	$	393,262	$	322,627		17.3	%		17.0	%		17.4	%		16.9	%

XML

Investments (Tables)

3 Months Ended

Mar. 31, 2019

Investments Debt And Equity Securities [Abstract]

Available-for-Sale Investments Including Other-Than-Temporarily Impaired Securities Recognized within Accumulated Other Comprehensive Income

The following tables set forth our Company’s Available-For-Sale Investments as of March 31, 2019 and December 31, 2018 and include Other-Than-Temporary-Impairment (“OTTI”) securities recognized within Accumulated Other Comprehensive Income (“AOCI”):

	March 31, 2019
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	226,093	$	1,334	$	(3,050	)	$	227,809
States, Municipalities and Political Subdivisions		698,980		21,932		(586	)		677,634
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		329,582		1,106		(8,771	)		337,247
Residential Mortgage Obligations		154,149		1,538		(295	)		152,906
Asset-Backed Securities		532,027		1,746		(4,309	)		534,590
Commercial Mortgage-Backed Securities		199,450		2,089		(1,397	)		198,758
Subtotal	$	1,215,208	$	6,479	$	(14,772	)	$	1,223,501
Corporate Exposures (1)		1,019,527		12,910		(8,061	)		1,014,678
Total Fixed Maturities	$	3,159,808	$	42,655	$	(26,469	)	$	3,143,622
Short-Term Investments		7,287		—		(1	)		7,288
Total Available-For-Sale Investments	$	3,167,095	$	42,655	$	(26,470	)	$	3,150,910

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2018
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	239,776	$	901	$	(3,957	)	$	242,832
States, Municipalities and Political Subdivisions		646,551		10,734		(3,448	)		639,265
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		335,542		843		(13,118	)		347,817
Residential Mortgage Obligations		138,373		604		(530	)		138,299
Asset-Backed Securities		531,991		1,018		(8,040	)		539,013
Commercial Mortgage-Backed Securities		188,201		858		(2,816	)		190,159
Subtotal	$	1,194,107	$	3,323	$	(24,504	)	$	1,215,288
Corporate Exposures (1)		1,002,489		3,101		(28,640	)		1,028,028
Total Fixed Maturities	$	3,082,923	$	18,059	$	(60,549	)	$	3,125,413
Short-Term Investments		10,233		—		(1	)		10,234
Total Available-For-Sale Investments	$	3,093,156	$	18,059	$	(60,550	)	$	3,135,647

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Equity Securities at Fair Value

The following table sets forth our Company’s Equity Securities at fair value as of March 31, 2019 and December 31, 2018:

	As of March 31, 2019
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	181,512	$	11,495	$	(2,644	)	$	172,661
Preferred Stocks		176,935		2,082		(5,694	)		180,547
Total Equity Securities	$	358,447	$	13,577	$	(8,338	)	$	353,208

	December 31, 2018
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	166,353	$	4,738	$	(15,984	)	$	177,599
Preferred Stocks		173,539		511		(10,791	)		183,819
Total Equity Securities	$	339,892	$	5,249	$	(26,775	)	$	361,418

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

The contractual maturity dates for Fixed Maturities categorized by the number of years until maturity as of March 31, 2019 are shown in the following table:

	March 31, 2019
	Fair		Amortized
amounts in thousands	Value		Cost
Due in one year or less	$	145,022	$	145,859
Due after one year through five years		805,156		802,331
Due after five years through ten years		372,917		362,404
Due after ten years		621,505		609,527
Mortgage-Backed and Asset-Backed Securities		1,215,208		1,223,501
Total	$	3,159,808	$	3,143,622

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

The following tables summarize all Available-For-Sale securities in a gross unrealized loss position as of March 31, 2019 and December 31, 2018, showing the aggregate fair value and gross unrealized loss by the length of time those securities have continuously been in a gross unrealized loss position:

	March 31, 2019
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	32,603	$	(377	)	$	121,784	$	(2,673	)	$	154,387	$	(3,050	)
States, Municipalities and Political Subdivisions		6,964		(4	)		76,493		(582	)		83,457		(586	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		2,924		(19	)		291,576		(8,752	)		294,500		(8,771	)
Residential Mortgage Obligations		35,368		(36	)		14,258		(259	)		49,626		(295	)
Asset-Backed Securities		266,463		(3,490	)		96,222		(819	)		362,685		(4,309	)
Commercial Mortgage-Backed Securities		55,185		(141	)		42,717		(1,256	)		97,902		(1,397	)
Subtotal	$	359,940	$	(3,686	)	$	444,773	$	(11,086	)	$	804,713	$	(14,772	)
Corporate Exposures (1)		35,038		(461	)		438,306		(7,600	)		473,344		(8,061	)
Total Fixed Maturities	$	434,545	$	(4,528	)	$	1,081,356	$	(21,941	)	$	1,515,901	$	(26,469	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2018
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	101,395	$	(2,486	)	$	112,195	$	(1,471	)	$	213,590	$	(3,957	)
States, Municipalities and Political Subdivisions		123,479		(1,274	)		105,405		(2,174	)		228,884		(3,448	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		34,819		(814	)		270,997		(12,304	)		305,816		(13,118	)
Residential Mortgage Obligations		70,965		(249	)		10,110		(281	)		81,075		(530	)
Asset-Backed Securities		345,437		(6,950	)		77,362		(1,090	)		422,799		(8,040	)
Commercial Mortgage-Backed Securities		58,877		(282	)		41,477		(2,534	)		100,354		(2,816	)
Subtotal	$	510,098	$	(8,295	)	$	399,946	$	(16,209	)	$	910,044	$	(24,504	)
Corporate Exposures (1)		481,057		(15,456	)		300,113		(13,184	)		781,170		(28,640	)
Total Fixed Maturities	$	1,216,029	$	(27,511	)	$	917,659	$	(33,038	)	$	2,133,688	$	(60,549	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Net Investment Income

Our Company’s Net Investment Income was derived from the following sources:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Fixed Maturities	$	25,015		$	21,052
Equity Securities		3,155			2,925
Short-Term Investments, Cash & Cash Equivalents		570			227
Other Invested Assets		228			186
Total Investment Income	$	28,968		$	24,390
Investment Expenses		(749	)		(688	)
Net Investment Income	$	28,219		$	23,702

Realized Gains and Losses on Investments Sold, Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings

Realized Gains and Losses on Investments Sold, excluding net OTTI losses recognized in earnings, for the periods indicated, were as follows:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Fixed Maturities:
Gains	$	784		$	1,806
Losses		(265	)		(275	)
Fixed Maturities, Net	$	519		$	1,531
Short-Term Investments, Cash & Cash Equivalents:
Gains	$	—		$	18
Losses		(17	)		(174	)
Short-Term, Net	$	(17	)	$	(156	)
Other Invested Assets:
Gains	$	134		$	50
Losses		—			(41	)
Other Invested Assets, Net	$	134		$	9
Equity Securities:
Gains	$	3		$	—
Losses		(246	)		(215	)
Equity Securities, Net	$	(243	)	$	(215	)
Net Realized Gains on Investments Sold	$	393		$	1,169

Portion of Net Unrealized Gains (Losses) Recognized to Equity Securities

The following table presents the portion of Net Unrealized Gains (Losses) that relates to Equity Securities recognized during the three months ended March 31, 2018 and 2019:

	Three Months Ended March 31,
amounts in thousands	2019			2018
Equity Securities:
Total Net Realized and Unrealized Gains (Losses) recognized	$	26,526		$	(3,396	)
Less: Net Realized Losses on Investments Sold		(243	)		(215	)
Net Unrealized Gains (Losses) recognized	$	26,769		$	(3,181	)

XML

Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

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 described above, our Company’s Fixed Maturities and Equity Securities by asset class that are measured at fair value on a recurring basis, as well as the fair value of the 5.75% Senior Notes due October 15, 2023 (the “Senior Notes”) carried at amortized cost as of March 31, 2019 and December 31, 2018:

	March 31, 2019
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	26,308	$	199,785	$	—	$	226,093
States, Municipalities and Political Subdivisions		—		698,980		—		698,980
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		329,582		—		329,582
Residential Mortgage Obligations		—		154,149		—		154,149
Asset-Backed Securities		—		532,027		—		532,027
Commercial Mortgage-Backed Securities		—		199,450		—		199,450
Subtotal	$	—	$	1,215,208	$	—	$	1,215,208
Corporate Exposures		—		1,019,527		—		1,019,527
Total Fixed Maturities	$	26,308	$	3,133,500	$	—	$	3,159,808
Equity Securities:
Common Stocks	$	34,678	$	146,834	$	—	$	181,512
Preferred Stocks		—		176,935		—		176,935
Total Equity Securities	$	34,678	$	323,769	$	—	$	358,447
Short-Term Investments		—		7,287		—		7,287
Total Assets Measured at Fair Value	$	60,986	$	3,464,556	$	—	$	3,525,542
Senior Notes	$	—	$	283,554	$	—	$	283,554
Total Liabilities Measured at Fair Value	$	—	$	283,554	$	—	$	283,554

	December 31, 2018
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	35,537	$	204,239	$	—	$	239,776
States, Municipalities and Political Subdivisions		—		646,551		—		646,551
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		335,542		—		335,542
Residential Mortgage Obligations		—		138,373		—		138,373
Asset-Backed Securities		—		531,991		—		531,991
Commercial Mortgage-Backed Securities		—		188,201		—		188,201
Subtotal	$	—	$	1,194,107	$	—	$	1,194,107
Corporate Exposures		—		1,002,489		—		1,002,489
Total Fixed Maturities	$	35,537	$	3,047,386	$	—	$	3,082,923
Equity Securities:
Common Stocks	$	35,029	$	131,324	$	—	$	166,353
Preferred Stocks		—		173,539		—		173,539
Total Equity Securities	$	35,029	$	304,863	$	—	$	339,892
Short-Term Investments		—		10,233		—		10,233
Total Assets Measured at Fair Value	$	70,566	$	3,362,482	$	—	$	3,433,048
Senior Notes	$	—	$	278,150	$	—	$	278,150
Total Liabilities Measured at Fair Value	$	—	$	278,150	$	—	$	278,150

XML

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Analysis of Goodwill by Reporting Segment

The following table shows an analysis of goodwill by reporting segment:

	Three Months Ended March 31, 2019
	U.S.		Int'l
amounts in thousands	Insurance		Insurance			Total
Goodwill at Beginning of the Period	$	1,978	$	14,840		$	16,818
Foreign Currency Translation Adjustment		—		(31	)		(31	)
Goodwill at End of the Period	$	1,978	$	14,809		$	16,787

Summary of Gross Carrying Value and Weighted Average Amortization Period of Intangible Assets by Type

The gross carrying value, accumulated amortization, and weighted average amortization period of intangible assets by type at March 31, 2019 was as follows:

	As of March 31, 2019
amounts in thousands	Gross Carrying Amount		Accumulated Amortization			Weighted Average Amortization Period
Finite-Lived Assets
ASCO Customer Relationships	$	3,260	$	(245	)	10 years
ASCO VOBA		1,649		(309	)	4 years
BDM Broker Networks		976		(49	)	15 years
BDM Trade Name		480		(360	)	1 year
Total	$	6,365	$	(963	)
Indefinite-Lived Assets
ASCO European Licenses	$	2,399	indefinite
NUAL Lloyd's Syndicate Capacity		2,136	indefinite
Total	$	4,535

XML

Loss Reserves (Tables)

3 Months Ended

Mar. 31, 2019

Insurance [Abstract]

Summary of Reserves for Losses and LAE Activity

The following table summarizes our Company’s Reserves for Losses and LAE activity for the three months ended March 31, 2019 and 2018:

	For the Three Months Ended March 31,
amounts in thousands	2019			2018
Net Reserves for Losses and LAE at Beginning of Year	$	1,923,784		$	1,705,380
Provision for Losses and LAE for Claims Occurring in the Current Year		218,029			184,179
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years		52,323			1,966
Incurred Losses and LAE	$	270,352		$	186,145
Losses and LAE Paid for Claims Occurring During:
Current Year		(19,251	)		(9,206	)
Prior Years		(203,287	)		(155,860	)
Losses and LAE Payments	$	(222,538	)	$	(165,066	)
Foreign Currency Adjustment		8,084			4,980
Net Reserves for Losses and LAE at End of Period		1,979,682			1,731,439
Reinsurance Recoverables on Unpaid Losses and LAE		830,732			790,388
Gross Reserves for Losses and LAE at End of Period	$	2,810,414		$	2,521,827

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Schedule of Additional Information Regarding the Company's Real Estate Operating Leases

Rent expense is included in Other Operating Expenses in the Consolidated Statement of Income (Loss). Additional information regarding the Company’s real estate operating leases is as follows:

amounts in thousands	Three Months Ended March 31, 2019
Lease cost
Operating leases	$	2,121
Variable leases		2
Total lease cost	$	2,123
Other information on operating leases
Cash payments included in the measurement of lease liabilities reported in operating cash flows	$	2,459
Weighted average discount rate		2.97	%
Weighted average remaining lease term in years	7.2 years

Schedule of Contractual Maturities of the Company's Lease Liabilities

The following table presents the contractual maturities of the Company's lease liabilities:

amounts in thousands	Real Estate Lease Liability
Remainder of 2019	$	7,480
2020		9,818
2021		8,985
2022		8,090
2023		7,344
Thereafter		15,869
Total undiscounted lease base rent payments		57,586
Less: present value adjustment		3,970
Operating lease liability	$	53,616

XML

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Restricted Stock Unit Awards

The activity related to our Company's restricted stock unit awards was as follows:

	Three Months Ended March 31, 2019
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		86,589		$	49.45
Granted		191,713			69.76
Vested (2)		(14,849	)		46.51
Forfeited		(8,250	)		48.74
Nonvested at the end of the period		255,203		$	64.90

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the three months ended March 31, 2019 share awards of 6,043 were withheld for tax payments at a weighted average vest date fair value of $69.62.

Performance-based Equity Awards

The activity related to our Company's performance-based equity awards was as follows:

	Three Months Ended March 31, 2019
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		845,533		$	48.86
Granted		—			—
Performance Adjustment		(96,448	)		40.57
Vested (2)		(247,448	)		40.70
Forfeited		(27,000	)		51.27
Nonvested at the end of the period		474,637		$	54.66

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the three months ended March 31, 2019 share awards of 98,558 were withheld for tax payments at a weighted average vest date fair value of $69.78.

XML

Organization and Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) Insurance	Jun. 30, 2018 Company
Organization And Summary Of Significant Accounting Policies [Line Items]
Number of insurance companies | Insurance	2
Number of companies acquired | Company		3
Corporate income tax rate	21.00%
Right-of-Use Asset	$ 44,615
Lease Liability Obligation	$ 53,616
Bracht, Deckers & Mackelbert NV and Assurances Continentales - Continentale Verzekeringen NV
Organization And Summary Of Significant Accounting Policies [Line Items]
Ownership interest in consolidated subsidiary	100.00%
Syndicate 1221
Organization And Summary Of Significant Accounting Policies [Line Items]
Percentage control of stamp capacity	100.00%
Navigators Holdings NV
Organization And Summary Of Significant Accounting Policies [Line Items]
Ownership interest in consolidated subsidiary	100.00%

XML

Merger - Additional Information (Detail)	Aug. 22, 2018 $ / shares
The Hartford
Business Acquisition [Line Items]
Merger Consideration	$ 70.00

XML

Segment Information - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019 Segment
Segment Reporting Information [Line Items]
Number of underwriting Segments	3
U.S.Insurance
Segment Reporting Information [Line Items]
Number of Operating Segments	3
International Insurance
Segment Reporting Information [Line Items]
Number of Operating Segments	3

XML

Financial Data by Segment (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Gross Written Premiums		$ 580,976	$ 495,224
Ceded Written Premiums		(119,309)	(101,962)
Net Written Premiums		$ 461,667	$ 393,262
Retention Ratio		79.50%	79.40%
Net Earned Premiums		$ 377,189	$ 322,627
Net Losses and LAE		(270,352)	(186,145)
Commission Expenses		(67,716)	(54,152)
Other Operating Expenses		(83,756)	(62,926)
Other Underwriting Income (Expense)		1,123	3
Underwriting Loss		(43,512)	19,407
Net Investment Income		28,219	23,702
Total Net Realized and Unrealized Gains		27,162	(2,012)
Interest Expense		(3,867)	(3,864)
Other Income (Loss)		(5,395)	(120)
Merger Transaction Costs		(850)
Income Before Income Taxes		1,757	37,113
Income Tax Expense		(3,495)	(6,235)
Net Income (Loss)		$ (1,738)	$ 30,878
Losses and LAE Ratio		71.70%	57.70%
Commission Expense Ratio		18.00%	16.80%
Other Operating Expense Ratio	[1]	21.80%	19.50%
Combined Ratio		111.50%	94.00%
U.S.Insurance
Segment Reporting Information [Line Items]
Gross Written Premiums		$ 291,967	$ 239,928
Ceded Written Premiums		(73,795)	(66,581)
Net Written Premiums		$ 218,172	$ 173,347
Retention Ratio		74.70%	72.20%
Net Earned Premiums		$ 202,037	$ 172,913
Net Losses and LAE		(151,125)	(110,422)
Commission Expenses		(24,786)	(20,861)
Other Operating Expenses		(43,210)	(36,991)
Other Underwriting Income (Expense)		95	98
Underwriting Loss		(16,989)	4,737
Income Before Income Taxes		$ (16,989)	$ 4,737
Losses and LAE Ratio		74.80%	63.90%
Commission Expense Ratio		12.30%	12.10%
Other Operating Expense Ratio	[1]	21.30%	21.30%
Combined Ratio		108.40%	97.30%
International Insurance
Segment Reporting Information [Line Items]
Gross Written Premiums		$ 156,129	$ 127,872
Ceded Written Premiums		(37,731)	(28,888)
Net Written Premiums		$ 118,398	$ 98,984
Retention Ratio		75.80%	77.40%
Net Earned Premiums		$ 108,913	$ 93,210
Net Losses and LAE		(75,458)	(45,843)
Commission Expenses		(26,447)	(19,756)
Other Operating Expenses		(32,422)	(20,530)
Other Underwriting Income (Expense)		1,034
Underwriting Loss		(24,380)	7,081
Income Before Income Taxes		$ (24,380)	$ 7,081
Losses and LAE Ratio		69.30%	49.20%
Commission Expense Ratio		24.30%	21.20%
Other Operating Expense Ratio	[1]	28.80%	22.00%
Combined Ratio		122.40%	92.40%
Global Reinsurance
Segment Reporting Information [Line Items]
Gross Written Premiums		$ 132,880	$ 127,424
Ceded Written Premiums		(7,783)	(6,493)
Net Written Premiums		$ 125,097	$ 120,931
Retention Ratio		94.10%	94.90%
Net Earned Premiums		$ 66,239	$ 56,504
Net Losses and LAE		(43,769)	(29,880)
Commission Expenses		(16,433)	(13,768)
Other Operating Expenses		(8,124)	(5,405)
Other Underwriting Income (Expense)		(56)	138
Underwriting Loss		(2,143)	7,589
Income Before Income Taxes		$ (2,143)	$ 7,589
Losses and LAE Ratio		66.10%	52.90%
Commission Expense Ratio		24.80%	24.40%
Other Operating Expense Ratio	[1]	12.30%	9.30%
Combined Ratio		103.20%	86.60%
Corporate
Segment Reporting Information [Line Items]
Commission Expenses	[2]	$ (50)	$ 233
Other Underwriting Income (Expense)	[2]	50	(233)
Net Investment Income	[2]	28,219	23,702
Total Net Realized and Unrealized Gains	[2]	27,162	(2,012)
Interest Expense	[2]	(3,867)	(3,864)
Other Income (Loss)	[2]	(5,395)	(120)
Merger Transaction Costs	[2]	(850)
Income Before Income Taxes	[2]	45,269	17,706
Income Tax Expense	[2]	$ (3,495)	$ (6,235)

[1] Includes Other Operating Expenses and Other Underwriting Income (Expense).

[2] Includes Corporate segment intercompany eliminations.

XML

Revenue by Operating Segment (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 580,976	$ 495,224
Ceded Written Premiums	(119,309)	(101,962)
Net Written Premiums	461,667	393,262
Net Earned Premiums	$ 377,189	322,627
% Change Gross Written Premiums	17.30%
% Change Ceded Written Premiums	17.00%
% Change Net Written Premiums	17.40%
% Change Net Earned Premiums	16.90%
U.S.Insurance
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 291,967	239,928
Ceded Written Premiums	(73,795)	(66,581)
Net Written Premiums	218,172	173,347
Net Earned Premiums	$ 202,037	172,913
% Change Gross Written Premiums	21.70%
% Change Ceded Written Premiums	10.80%
% Change Net Written Premiums	25.90%
% Change Net Earned Premiums	16.80%
U.S.Insurance | Marine
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 47,801	41,724
Ceded Written Premiums	(15,077)	(17,480)
Net Written Premiums	32,724	24,244
Net Earned Premiums	$ 23,357	21,092
% Change Gross Written Premiums	14.60%
% Change Ceded Written Premiums	(13.70%)
% Change Net Written Premiums	35.00%
% Change Net Earned Premiums	10.70%
U.S.Insurance | Property Casualty
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 207,802	168,193
Ceded Written Premiums	(53,544)	(44,912)
Net Written Premiums	154,258	123,281
Net Earned Premiums	$ 151,171	127,590
% Change Gross Written Premiums	23.50%
% Change Ceded Written Premiums	19.20%
% Change Net Written Premiums	25.10%
% Change Net Earned Premiums	18.50%
U.S.Insurance | Professional Liability
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 36,364	30,011
Ceded Written Premiums	(5,174)	(4,189)
Net Written Premiums	31,190	25,822
Net Earned Premiums	$ 27,509	24,231
% Change Gross Written Premiums	21.20%
% Change Ceded Written Premiums	23.50%
% Change Net Written Premiums	20.80%
% Change Net Earned Premiums	13.50%
International Insurance
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 156,129	127,872
Ceded Written Premiums	(37,731)	(28,888)
Net Written Premiums	118,398	98,984
Net Earned Premiums	$ 108,913	93,210
% Change Gross Written Premiums	22.10%
% Change Ceded Written Premiums	30.60%
% Change Net Written Premiums	19.60%
% Change Net Earned Premiums	16.80%
International Insurance | Marine
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 54,861	56,478
Ceded Written Premiums	(11,236)	(8,054)
Net Written Premiums	43,625	48,424
Net Earned Premiums	$ 35,744	39,279
% Change Gross Written Premiums	(2.90%)
% Change Ceded Written Premiums	39.50%
% Change Net Written Premiums	(9.90%)
% Change Net Earned Premiums	(9.00%)
International Insurance | Property Casualty
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 58,567	33,960
Ceded Written Premiums	(14,037)	(13,667)
Net Written Premiums	44,530	20,293
Net Earned Premiums	$ 36,033	21,769
% Change Gross Written Premiums	72.50%
% Change Ceded Written Premiums	2.70%
% Change Net Written Premiums	119.40%
% Change Net Earned Premiums	65.50%
International Insurance | Professional Liability
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 42,701	37,434
Ceded Written Premiums	(12,458)	(7,167)
Net Written Premiums	30,243	30,267
Net Earned Premiums	$ 37,136	32,162
% Change Gross Written Premiums	14.10%
% Change Ceded Written Premiums	73.80%
% Change Net Written Premiums	(0.10%)
% Change Net Earned Premiums	15.50%
Global Reinsurance
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 132,880	127,424
Ceded Written Premiums	(7,783)	(6,493)
Net Written Premiums	125,097	120,931
Net Earned Premiums	$ 66,239	$ 56,504
% Change Gross Written Premiums	4.30%
% Change Ceded Written Premiums	19.90%
% Change Net Written Premiums	3.40%
% Change Net Earned Premiums	17.20%

XML

Available-for-Sale Investments Including Other-Than-Temporarily Impaired Securities Recognized within Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands		Mar. 31, 2019	Dec. 31, 2018
Gain (Loss) on Investments [Line Items]
Total available for sale investments		$ 3,167,095	$ 3,093,156
Gross Unrealized Gains		42,655	18,059
Gross Unrealized Losses		(26,470)	(60,550)
Amortized Cost		3,150,910	3,135,647
Fixed Maturities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		3,159,808	3,082,923
Gross Unrealized Gains		42,655	18,059
Gross Unrealized Losses		(26,469)	(60,549)
Amortized Cost		3,143,622	3,125,413
Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Gain (Loss) on Investments [Line Items]
Total available for sale investments		226,093	239,776
Gross Unrealized Gains		1,334	901
Gross Unrealized Losses		(3,050)	(3,957)
Amortized Cost		227,809	242,832
Fixed Maturities | States, Municipalities and Political Subdivisions
Gain (Loss) on Investments [Line Items]
Total available for sale investments		698,980	646,551
Gross Unrealized Gains		21,932	10,734
Gross Unrealized Losses		(586)	(3,448)
Amortized Cost		677,634	639,265
Fixed Maturities | Agency Residential Mortgage-Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		329,582	335,542
Gross Unrealized Gains		1,106	843
Gross Unrealized Losses		(8,771)	(13,118)
Amortized Cost		337,247	347,817
Fixed Maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		154,149	138,373
Gross Unrealized Gains		1,538	604
Gross Unrealized Losses		(295)	(530)
Amortized Cost		152,906	138,299
Fixed Maturities | Asset-Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		532,027	531,991
Gross Unrealized Gains		1,746	1,018
Gross Unrealized Losses		(4,309)	(8,040)
Amortized Cost		534,590	539,013
Fixed Maturities | Commercial Mortgage-Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		199,450	188,201
Gross Unrealized Gains		2,089	858
Gross Unrealized Losses		(1,397)	(2,816)
Amortized Cost		198,758	190,159
Fixed Maturities | Mortgage-Backed and Asset-Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		1,215,208	1,194,107
Gross Unrealized Gains		6,479	3,323
Gross Unrealized Losses		(14,772)	(24,504)
Amortized Cost		1,223,501	1,215,288
Fixed Maturities | Corporate Exposures
Gain (Loss) on Investments [Line Items]
Total available for sale investments	[1]	1,019,527	1,002,489
Gross Unrealized Gains	[1]	12,910	3,101
Gross Unrealized Losses	[1]	(8,061)	(28,640)
Amortized Cost	[1]	1,014,678	1,028,028
Short-Term Investments
Gain (Loss) on Investments [Line Items]
Total available for sale investments		7,287	10,233
Gross Unrealized Losses		(1)	(1)
Amortized Cost		$ 7,288	$ 10,234

[1] Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

XML

Equity Securities at Fair Value (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Gain (Loss) on Investments [Line Items]
Fair Value	$ 358,447	$ 339,892
Gross Unrealized Gains	13,577	5,249
Gross Unrealized (Losses)	(8,338)	(26,775)
Cost	353,208	361,418
Common Stock
Gain (Loss) on Investments [Line Items]
Fair Value	181,512	166,353
Gross Unrealized Gains	11,495	4,738
Gross Unrealized (Losses)	(2,644)	(15,984)
Cost	172,661	177,599
Preferred Stocks
Gain (Loss) on Investments [Line Items]
Fair Value	176,935	173,539
Gross Unrealized Gains	2,082	511
Gross Unrealized (Losses)	(5,694)	(10,791)
Cost	$ 180,547	$ 183,819

XML

Investments - Additional Information (Detail)	3 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($) Security	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($) Security
Schedule of Investments [Line Items]
Non-credit OTTI on fixed maturities in a net unrealized gain position	$ 300,000		$ 300,000
OTTI losses	0	$ 0
Change to cumulative amounts of credit loss portion of OTTI losses	$ 0	0
Fixed Maturities
Schedule of Investments [Line Items]
Number of securities in unrealized loss position | Security	511		808
Gross Unrealized Loss	$ 26,469,000		$ 60,549,000
Cumulative amounts related to credit loss portion of OTTI losses	$ 2,300,000	$ 2,400,000
Non-government-backed securities | Maximum
Schedule of Investments [Line Items]
Percentage of investment	5.00%		5.00%
Gross Unrealized Loss	$ 1,800,000		$ 3,700,000
Mortgage-Backed and Asset-Backed Securities
Schedule of Investments [Line Items]
Securities, effective maturities	5 years 1 month 6 days
Mortgage-Backed and Asset-Backed Securities | Fixed Maturities
Schedule of Investments [Line Items]
Gross Unrealized Loss	$ 14,772,000		24,504,000
Other Invested Assets
Schedule of Investments [Line Items]
Equity method investments, cost	2,000,000		2,000,000
Equity method investments, carrying Value	1,900,000		1,900,000
Overseas deposits, fair value	$ 50,400,000		$ 46,500,000

XML

Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value
Total	$ 3,167,095	$ 3,093,156
Amortized Cost
Amortized Cost	3,150,910	3,135,647
Fixed Maturities
Fair Value
Due in one year or less	145,022
Due after one year through five years	805,156
Due after five years through ten years	372,917
Due after ten years	621,505
Mortgage-Backed and Asset-Backed Securities	1,215,208
Total	3,159,808	3,082,923
Amortized Cost
Due in one year or less	145,859
Due after one year through five years	802,331
Due after five years through ten years	362,404
Due after ten years	609,527
Mortgage-Backed and Asset-Backed Securities	1,223,501
Amortized Cost	$ 3,143,622	$ 3,125,413

XML

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) - Fixed Maturities - USD ($) $ in Thousands		Mar. 31, 2019	Dec. 31, 2018
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		$ 434,545	$ 1,216,029
Less than 12 months Gross Unrealized Losses		(4,528)	(27,511)
Greater than 12 months Fair Value		1,081,356	917,659
Greater than 12 months Gross Unrealized Losses		(21,941)	(33,038)
Fair Value		1,515,901	2,133,688
Gross Unrealized Losses		(26,469)	(60,549)
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		32,603	101,395
Less than 12 months Gross Unrealized Losses		(377)	(2,486)
Greater than 12 months Fair Value		121,784	112,195
Greater than 12 months Gross Unrealized Losses		(2,673)	(1,471)
Fair Value		154,387	213,590
Gross Unrealized Losses		(3,050)	(3,957)
States, Municipalities and Political Subdivisions
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		6,964	123,479
Less than 12 months Gross Unrealized Losses		(4)	(1,274)
Greater than 12 months Fair Value		76,493	105,405
Greater than 12 months Gross Unrealized Losses		(582)	(2,174)
Fair Value		83,457	228,884
Gross Unrealized Losses		(586)	(3,448)
Agency Residential Mortgage-Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		2,924	34,819
Less than 12 months Gross Unrealized Losses		(19)	(814)
Greater than 12 months Fair Value		291,576	270,997
Greater than 12 months Gross Unrealized Losses		(8,752)	(12,304)
Fair Value		294,500	305,816
Gross Unrealized Losses		(8,771)	(13,118)
Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		35,368	70,965
Less than 12 months Gross Unrealized Losses		(36)	(249)
Greater than 12 months Fair Value		14,258	10,110
Greater than 12 months Gross Unrealized Losses		(259)	(281)
Fair Value		49,626	81,075
Gross Unrealized Losses		(295)	(530)
Asset-Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		266,463	345,437
Less than 12 months Gross Unrealized Losses		(3,490)	(6,950)
Greater than 12 months Fair Value		96,222	77,362
Greater than 12 months Gross Unrealized Losses		(819)	(1,090)
Fair Value		362,685	422,799
Gross Unrealized Losses		(4,309)	(8,040)
Commercial Mortgage-Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		55,185	58,877
Less than 12 months Gross Unrealized Losses		(141)	(282)
Greater than 12 months Fair Value		42,717	41,477
Greater than 12 months Gross Unrealized Losses		(1,256)	(2,534)
Fair Value		97,902	100,354
Gross Unrealized Losses		(1,397)	(2,816)
Mortgage-Backed and Asset-Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		359,940	510,098
Less than 12 months Gross Unrealized Losses		(3,686)	(8,295)
Greater than 12 months Fair Value		444,773	399,946
Greater than 12 months Gross Unrealized Losses		(11,086)	(16,209)
Fair Value		804,713	910,044
Gross Unrealized Losses		(14,772)	(24,504)
Corporate Exposures
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value	[1]	35,038	481,057
Less than 12 months Gross Unrealized Losses	[1]	(461)	(15,456)
Greater than 12 months Fair Value	[1]	438,306	300,113
Greater than 12 months Gross Unrealized Losses	[1]	(7,600)	(13,184)
Fair Value	[1]	473,344	781,170
Gross Unrealized Losses	[1]	$ (8,061)	$ (28,640)

[1] Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

XML

Net Investment Income (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net Investment Income [Line Items]
Investment Income	$ 28,968	$ 24,390
Investment Expenses	(749)	(688)
Net Investment Income	28,219	23,702
Fixed Maturities
Net Investment Income [Line Items]
Investment Income	25,015	21,052
Equity Securities
Net Investment Income [Line Items]
Investment Income	3,155	2,925
Short-Term Investments, Cash & Cash Equivalents
Net Investment Income [Line Items]
Investment Income	570	227
Other Invested Assets
Net Investment Income [Line Items]
Investment Income	$ 228	$ 186

XML

Realized Gains and Losses on Investment Sold, Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Gain (Loss) on Investments [Line Items]
Net Realized Gains (Losses) on Investments Sold	$ 393	$ 1,169
Fixed Maturities
Gain (Loss) on Investments [Line Items]
Gains	784	1,806
Losses	(265)	(275)
Net Realized Gains (Losses) on Investments Sold	519	1,531
Short-Term Investments, Cash & Cash Equivalents
Gain (Loss) on Investments [Line Items]
Gains		18
Losses	(17)	(174)
Net Realized Gains (Losses) on Investments Sold	(17)	(156)
Other Invested Assets
Gain (Loss) on Investments [Line Items]
Gains	134	50
Losses		(41)
Net Realized Gains (Losses) on Investments Sold	134	9
Equity Securities
Gain (Loss) on Investments [Line Items]
Gains	3
Losses	(246)	(215)
Net Realized Gains (Losses) on Investments Sold	$ (243)	$ (215)

XML

Portion of Net Unrealized Gains (Losses) Recognized to Equity Securities (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Gain (Loss) on Investments [Line Items]
Net Unrealized Gains (Losses) recognized	$ 26,769	$ (3,181)
Equity Securities
Gain (Loss) on Investments [Line Items]
Total Net Realized and Unrealized Gains (Losses) recognized	26,526	(3,396)
Less: Net Realized Losses on Investments Sold	(243)	(215)
Net Unrealized Gains (Losses) recognized	$ 26,769	$ (3,181)

XML

Fair Value Measurement - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other invested assets at fair value	$ 50,400,000	$ 46,500,000
Significant transfers between Level 1 and Level 2	0
Level 3 assets	$ 0
5.75% Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate stated on senior notes	5.75%
Senior notes due date	Oct. 15, 2023

XML

Fixed Maturities and Equity Securities by Asset Class that are Measured at Fair Value (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets Measured at Fair Value	$ 3,525,542	$ 3,433,048
Total Liabilities Measured at Fair Value	283,554	278,150
Fixed Maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	3,159,808	3,082,923
Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	226,093	239,776
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	698,980	646,551
Fixed Maturities | Agency Residential Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	329,582	335,542
Fixed Maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	154,149	138,373
Fixed Maturities | Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	532,027	531,991
Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	199,450	188,201
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	1,215,208	1,194,107
Fixed Maturities | Corporate Exposures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	1,019,527	1,002,489
Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	358,447	339,892
Equity Securities | Common Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	181,512	166,353
Equity Securities | Preferred Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	176,935	173,539
Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	7,287	10,233
Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, at Fair Value	283,554	278,150
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets Measured at Fair Value	60,986	70,566
Total Liabilities Measured at Fair Value	0	0
Level 1 | Fixed Maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	26,308	35,537
Level 1 | Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	26,308	35,537
Level 1 | 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	0	0
Level 1 | Fixed Maturities | Agency Residential Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | 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	0	0
Level 1 | Fixed Maturities | Corporate Exposures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	34,678	35,029
Level 1 | Equity Securities | Common Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	34,678	35,029
Level 1 | Equity Securities | Preferred Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, at Fair Value	0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets Measured at Fair Value	3,464,556	3,362,482
Total Liabilities Measured at Fair Value	283,554	278,150
Level 2 | Fixed Maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	3,133,500	3,047,386
Level 2 | Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	199,785	204,239
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	698,980	646,551
Level 2 | Fixed Maturities | Agency Residential Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	329,582	335,542
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	154,149	138,373
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	532,027	531,991
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	199,450	188,201
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	1,215,208	1,194,107
Level 2 | Fixed Maturities | Corporate Exposures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	1,019,527	1,002,489
Level 2 | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	323,769	304,863
Level 2 | Equity Securities | Common Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	146,834	131,324
Level 2 | Equity Securities | Preferred Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	176,935	173,539
Level 2 | Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	7,287	10,233
Level 2 | Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, at Fair Value	283,554	278,150
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets Measured at Fair Value	0	0
Total Liabilities Measured at Fair Value	0	0
Level 3 | Fixed Maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | 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	0	0
Level 3 | Fixed Maturities | Agency Residential Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | 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	0	0
Level 3 | Fixed Maturities | Corporate Exposures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Equity Securities | Common Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Equity Securities | Preferred Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, at Fair Value	$ 0	$ 0

XML

Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill and Other Intangible Assets	$ 26,724	$ 27,146

XML

Goodwill and Intangible Assets - Summary of Analysis of Goodwill by Reporting Segment (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Goodwill [Line Items]
Goodwill at Beginning of the Period	$ 16,818
Foreign Currency Translation Adjustment	(31)
Goodwill at End of the Period	16,787
U.S.Insurance
Goodwill [Line Items]
Goodwill at Beginning of the Period	1,978
Goodwill at End of the Period	1,978
International Insurance
Goodwill [Line Items]
Goodwill at Beginning of the Period	14,840
Foreign Currency Translation Adjustment	(31)
Goodwill at End of the Period	$ 14,809

XML

Goodwill and Intangible Assets - Summary of Gross Carrying Value, Accumulated Amortization and Weighted Average Amortization Period of Intangible Assets by Type (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	$ 6,365
Finite-Lived Assets, Accumulated Amortization	(963)
Indefinite-Lived Assets, Gross Carrying Amount	4,535
ASCO Customer Relationships
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	3,260
Finite-Lived Assets, Accumulated Amortization	$ (245)
Finite-Lived Assets, Weighted Average Amortization Period	10 years
ASCO VOBA
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	$ 1,649
Finite-Lived Assets, Accumulated Amortization	$ (309)
Finite-Lived Assets, Weighted Average Amortization Period	4 years
BDM Broker Networks
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	$ 976
Finite-Lived Assets, Accumulated Amortization	$ (49)
Finite-Lived Assets, Weighted Average Amortization Period	15 years
BDM Trade Name
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	$ 480
Finite-Lived Assets, Accumulated Amortization	$ (360)
Finite-Lived Assets, Weighted Average Amortization Period	1 year
ASCO European Licenses
Intangible Assets [Line Items]
Indefinite-Lived Assets, Gross Carrying Amount	$ 2,399
NUAL Lloyd's Syndicate Capacity
Intangible Assets [Line Items]
Indefinite-Lived Assets, Gross Carrying Amount	$ 2,136

XML

Summary of Reserves for Losses and LAE Activity (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Insurance [Abstract]
Net Reserves for Losses and LAE at Beginning of Year	$ 1,923,784	$ 1,705,380
Provision for Losses and LAE for Claims Occurring in the Current Year	218,029	184,179
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years	52,323	1,966
Incurred Losses and LAE	270,352	186,145
Losses and LAE Paid for Claims Occurring During:
Current Year	(19,251)	(9,206)
Prior Years	(203,287)	(155,860)
Losses and LAE Payments	(222,538)	(165,066)
Foreign Currency Adjustment	8,084	4,980
Net Reserves for Losses and LAE at End of Period	1,979,682	1,731,439
Reinsurance Recoverables on Unpaid Losses and LAE	830,732	790,388	$ 820,189
Gross Reserves for Losses and LAE at End of Period	$ 2,810,414	$ 2,521,827	$ 2,743,973

XML

Loss Reserves - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Increase in incurred losses and LAE	$ 84,200
Increase in net prior accident year reserve strengthening	50,400
Provision for Losses and LAE for Claims Occurring in the Current Year	218,029	$ 184,179
Net prior accident year reserve strengthening	52,323	1,966
Increase in losses and loss adjustment expense payments	57,500
US Insurance Reporting Segment
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	26,600
US Insurance Reporting Segment | US Marine Operating Segment
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	23,400
US Insurance Reporting Segment | US Professional Liability Operating Segment
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	2,200
US Insurance Reporting Segment | P&C Operating Segment
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	1,000
Int'l Insurance Reporting Segment
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	16,800
Int'l Insurance Reporting Segment | P&C Operating Segment
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	(800)
Int'l Insurance Reporting Segment | Int'l Professional Liability Operating Segment
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	15,600
Int'l Insurance Reporting Segment | Int'l Marine Operating Segment
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	2,000
Global Reinsurance
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	8,900
Specialty Casualty
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	5,600
P&C Products
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	5,300
Marine Products [Member]
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	1,000
Surety Product
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Net prior accident year reserve strengthening	(3,000)
Catastrophe
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Provision for Losses and LAE for Claims Occurring in the Current Year	$ 2,000	$ 0

XML

Ceded Reinsurance - Additional Information (Detail) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Insurance [Abstract]
Reinsurance recoverable	$ 1,200.0
Allowance for uncollectible reinsurance	$ 13.4	$ 13.4

XML

Schedule of Additional Information Regarding the Company's Real Estate Operating Leases (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Lease cost
Operating leases	$ 2,121
Variable leases	2
Total lease cost	2,123
Other information on operating leases
Cash payments included in the measurement of lease liabilities reported in operating cash flows	$ 2,459
Weighted average discount rate	2.97%
Weighted average remaining lease term in years	7 years 2 months 12 days

XML

Schedule of Contractual Maturities of the Company's Lease Liabilities (Detail) $ in Thousands	Mar. 31, 2019 USD ($)
Leases [Abstract]
Remainder of 2019	$ 7,480
2020	9,818
2021	8,985
2022	8,090
2023	7,344
Thereafter	15,869
Total undiscounted lease base rent payments	57,586
Less: present value adjustment	3,970
Lease Liability Obligation	$ 53,616

XML

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	Aug. 22, 2018	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2013	Dec. 31, 2018
Loss Contingencies [Line Items]
Incentive awarded to the company by the State of Connecticut, total				$ 11,500
Incentive awarded to the company by the State of Connecticut, non-interest bearing loans				8,000
Incentive awarded to the company by the State of Connecticut, grants				$ 3,500
Non-interest bearing incentive loan term		10 years
Forgiveness awarded to the company by the state of Connecticut		$ 7,000
Incentive awarded to the company by the State of Connecticut, other revenue recognized		300	$ 400
Incentive awarded to the company by the State of Connecticut, deferred revenue included in other liabilities		$ 4,400			$ 4,700
The Hartford
Loss Contingencies [Line Items]
Merger Termination Fee	$ 68,250

XML

Stock-Based Compensation - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019
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
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
Performance Based Grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	3 years

XML

Restricted Stock Unit Awards (Detail) - Restricted Stock Units (RSUs)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Number of Awards
Nonvested at the beginning of the period | shares	86,589
Granted | shares	191,713
Vested | shares	(14,849)
Forfeited | shares	(8,250)
Nonvested at the end of the period | shares	255,203
Weighted Average Grant Date Fair Value
Nonvested at the beginning of the period | $ / shares	$ 49.45
Granted | $ / shares	69.76
Vested | $ / shares	46.51
Forfeited | $ / shares	48.74
Nonvested at the end of the period | $ / shares	$ 64.90

XML

Restricted Stock Unit Awards (Parenthetical) (Detail) - Restricted Stock Units (RSUs)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share awards withheld for tax payments | shares	6,043
Weighted average vest date fair value, withheld for tax payments | $ / shares	$ 69.62

XML

Performance-based Equity Awards (Detail) - Performance-based Equity Awards	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Number of Awards
Nonvested at the beginning of the period | shares	845,533
Granted | shares	0
Performance Adjustment | shares	(96,448)
Vested | shares	(247,448)
Forfeited | shares	(27,000)
Nonvested at the end of the period | shares	474,637
Weighted Average Grant Date Fair Value
Nonvested at the beginning of the period | $ / shares	$ 48.86
Granted | $ / shares	0
Performance Adjustment | $ / shares	40.57
Vested | $ / shares	40.70
Forfeited | $ / shares	51.27
Nonvested at the end of the period | $ / shares	$ 54.66

XML

Performance-based Equity Awards (Parenthetical) (Detail) - Performance-based Equity Awards	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share awards withheld for tax payments | shares	98,558
Weighted average vest date fair value, withheld for tax payments | $ / shares	$ 69.78

XML

Stockholders Equity - Additional Information (Detail) - $ / shares			3 Months Ended
	Mar. 11, 2019	Feb. 14, 2019	Mar. 31, 2019	Mar. 31, 2018
Equity [Abstract]
Common stock dividend paid per share	$ 0.07			$ 0.07
Common stock dividend per share declared		$ 0.07		$ 0.07
Dividend payable, date declared			Feb. 14, 2019
Dividend payable, date paid			Mar. 11, 2019

XML

Subsequent Events - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions			1 Months Ended	3 Months Ended
	May 09, 2019	Feb. 14, 2019	May 09, 2019	Mar. 31, 2019	Mar. 31, 2018
Subsequent Event [Line Items]
Dividend payable, date declared				Feb. 14, 2019
Common stock dividend per share declared		$ 0.07			$ 0.07
Dividend payable, date paid				Mar. 11, 2019
Subsequent Event
Subsequent Event [Line Items]
Unrecognized tax benefits decrease due to settlement with Internal Revenue Services			$ 6.4
Dividend payable, date declared	May 09, 2019
Common stock dividend per share declared	$ 0.07
Dividend payable, date paid	Jun. 04, 2019
Dividends payable, record date	May 20, 2019