The Navigators Group Inc. is a holding company with twelve active wholly owned subsidiaries. They primarily write marine onshore energy engineering and construction insurance and a contractors\' general liability program. As underwritten by Navigators marine insurance includes hull energy liability and cargo; onshore energy primarily covers property damage with an emphasis on the oil and petrochemical sectors; and engineering and construction primarily covers construction projects including machinery equipment and loss of use due to delays. Navigators Group Inc. has a market cap of $839.4 million; its shares were traded at around $49.57 with a P/E ratio of 11.4 and P/S ratio of 1.2. Navigators Group Inc. had an annual average earning growth of 115.7% over the past 5 years.
Highlight of Business Operations:Net income for the three months ended June 30, 2009 was $23.7 million or $1.39 per share compared to $17.4 million or $1.03 per share for the three months ended June 30, 2008. Included in these results were net realized capital gains of $0.08 per share and net realized capital losses of $0.31 per share for the three months ended June 30, 2009 and 2008, respectively. The 2009 second quarters net realized capital gains include impairments of $0.5 million for declines in the market value of securities which were considered to be other-than-temporary, as further discussed under the caption Investments, included herein. The after-tax loss of such impairments was $0.3 million or $0.02 per share. Recording realized capital losses on such securities has no impact on the Companys stockholders equity or book value per share since unrealized gains and losses on the investment portfolio are a component of accumulated other comprehensive income (loss).
Net income for the six months ended June 30, 2009 was $35.7 million or $2.10 per share compared to $40.7 million or $2.39 per share for the six months ended June 30, 2008. Included in these results were net realized capital losses of $0.40 per share and $0.31 per share for the six months ended June 30, 2009 and 2008, respectively.
Net income for the three and six month periods ended June 30, 2009 includes a gain related to the repurchase of $10 million aggregate principal amount of its issued and outstanding 7.00% senior notes from an unaffiliated note-holder on the open market for $7 million, which net of amortized costs resulted in a pre-tax gain of $2.9 million and added $0.11 to earnings per share.
The combined ratios, which consist of the sum of the loss and LAE ratio and the expense ratio for each period, for the 2009 second quarter and six month period were 92.9 % and 92.8% compared to 90.4% and 89.8% for the comparable periods in 2008. The combined ratios for the 2009 second quarter and six month period were reduced by 5.6 and 4.6 loss ratio points, for net loss reserve redundancies of $9.5 million and $15.2 million, respectively, relating to prior years. The combined ratios for the 2008 second quarter and six month period were reduced by 6.5 and 7.6 loss ratio points, respectively, for net loss reserve redundancies of $10.6 million and $24.3 million, respectively, relating to prior years. The net paid loss and LAE ratios for the 2009 second quarter and six month period were 36.4% and 39.9%, respectively, compared to 29.7% for the 2008 second quarter and 31.2% for the first six months of 2008.
Cash flow from operations was $69.5 million for the first six months of 2009 compared to $133.4 million for the comparable period in 2008. This decrease included a $43.5 million negative variance in our cash flows related to collections for storm loss recoverables from our reinsurers. During the first six months of 2008 we collected $21.3 million of net balances from reinsurers mostly related to gross losses paid during 2007 for Hurricanes Katrina and Rita, while during the first six months of 2009 our recoverable balances grew by $22.2 million related to gross storm loss payments that we have not yet collected from reinsurers primarily on Hurricanes Gustav and Ike.
Consolidated stockholders equity increased 8.4% to $747.8 million or $44.12 per share at June 30, 2009 compared to $689.3 million or $40.89 per share at December 31, 2008. The increase was due to unrealized investment portfolio gains and net income.
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