A.M. Affirms Ratings of Navigators Insurance Company, Its Subsidiary and The Navigators Group, Inc.


A.M. Affirms Ratings of Navigators Insurance Company, Its Subsidiary and The Navigators Group, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings of "a+" of Navigators Insurance Company (Navigators) and its wholly owned and 100% reinsuredsubsidiary, Navigators Specialty Insurance Company (Specialty). Concurrently, A.M. Best has affirmed the ICR of "bbb+" and the debt ratings of "bbb+" on $114 million 7% senior unsecured notes, due 2016 as well as the shelf ratings of "bbb+" on senior unsecured notes, "bbb" on subordinated notes and "bbb-" on preferred securities of Navigators' publicly traded ultimate parent, The Navigators Group, Inc. (Navigators, Inc.) (NAS: NAVG) . The outlook for all ratings is stable. All companies are domiciled in New York, NY.

The ratings reflect Navigators' solid level of risk-adjusted capitalization driven by consistent operating profitability. In addition, the ratings recognize management's conservative approach to overseeing the business via comprehensive risk selection, underwriting and claims handling processes, while continuing to work towards balancing and diversifying Navigators' portfolio.

These positive rating factors are offset by recent years' underwriting results, which have deteriorated from Navigators' historical performance levels, and elevated ceded reinsurance leverage. Adverse development of prior years' loss reserves, particularly for the group's errors and omissions and directors and officers programs, have impacted those underwriting results in recent calendar years. In 2012, Navigators' results were affected by major industry events, including the U.S. drought, Superstorm Sandy and Costa Concordia, which were somewhat offset by improving non-catastrophic losses. Management continues to diligently implement corrective actions such as re-underwriting and exiting certain business segments.

Navigators continues to benefit from the financial and explicit support available from Navigators, Inc. Financial leverage for Navigators, Inc. is conservative at 12.5% debt-to-total tangible capital, and coverage and operating ratios exceed A.M. Best's requirements for the current rating level.

The stable outlook acknowledges A.M. Best's expectations that Navigators will continue to maintain its solid level of capitalization and generate operating profits, as it has historically.

A.M. Best believes Navigators is well-positioned at its current rating level. However, negative rating actions could occur if there were a decline in its level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio, or a significant deterioration in underwriting results.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visitwww.ambest.com.

Copyright © 2013 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Adrienne Tortoriello, 908-439-2200, ext. 5088
Senior Financial Analyst
Jennifer Marshall, 908-439-2200, ext. 5327
Managing Senior Financial Analyst
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations

KEYWORDS: United States Europe North America New Jersey New York


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