##### Table of Contents



FORM 10-K
 x
    Annual Report Pursuant To
    Section 13 or 15(d) of the Securities Exchange Act of 1934     o
    Transition Report Pursuant to
    Section 13 or 15 (d) of the Securities Exchange Act of
    1934     No. 0-15886
 THE NAVIGATORS GROUP, INC.
   DELAWARE

13-3138397(State or other jurisdiction of 
    incorporation or organization)

(I.R.S. Employer 
    Identification No.)ONE PENN PLAZA, New York, New York

10119(Address of principal executive offices)

(Zip code)   (212) 244-2333
      Title of Each Class:

Name of each exchange on which registered:Common Stock, $.10 Par Value

The NASDAQ Global Select Market   Securities registered pursuant to
    Section 12(g) of the Act: None
    o x
  o x
  x o
  Regulation S-K Form 10-K Form 10-K. x
  Indicate
    by check mark whether the registrant is a large accelerated
    filer, an accelerated filer, a non-accelerated filer, or a
    smaller reporting company. See definitions of large
    accelerated filer, accelerated filer and
    smaller reporting company in
    Rule 12b-2
    of the Exchange Act. (Check one):
    Large accelerated
    filer x
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller reporting
    company o (Do
    not check if a smaller reporting company)
  Rule 12b-2 o x
      Documents
    Incorporated by reference
 Form 10-K.




---



##### 



TABLE OF CONTENTS
  PageDescription



NumberNote on Forward-Looking Statements


3PART IItem 1


Description of Business


4General


4Reinsurance Recoverables


5Loss Reserves


8Investments


16Ratings


24Regulation


25Competition


27Employees


27Available Information on the Internet


27Item 1A


Risk Factors


28Item 1B


Unresolved Staff Comments


32Item 2


Properties


32Item 3


Legal Proceedings


33Item 4


Submission of Matters to a Vote of Security
    Holders


33PART IIItem 5


Market for Companys Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


33Item 6


Selected Financial Data


36Item 7


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


37Overview


37Catastrophe Risk Management


38Hurricanes Katrina, Rita and Wilma


39Critical Accounting Policies


39Results of Operations and Overview


41Segment Information


56Off-Balance Sheet Transactions


61Tabular Disclosure of Contractual
    Obligations


62Investments


62Liquidity and Capital Resources


62Economic Conditions


64Item 7A


Quantitative and Qualitative Disclosures about
    Market Risk


65Item 8


Financial Statements and Supplementary
    Data


66Item 9


Changes in and Disagreements with Accountants
    on Accounting and Financial Disclosure


66Item 9A


Controls and Procedures


66Item 9B


Other Information


66PART IIIItem 10


Directors and Executive Officers of the
    Company


66Item 11


Executive Compensation


67Item 12


Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters


67Item 13


Certain Relationships and Related
    Transactions


67Item 14


Principal Accountant Fees and Services


67PART IVItem 15


Exhibits and Financial Statement
    Schedules


67Signatures


68Index to Consolidated
    Financial Statements and Schedules


F-1EX-11.1: STATEMENT RE COMPUTATION OF PER SHARE EARNINGSEX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF KPMG LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION    2




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##### Table of Contents



NOTE ON
    FORWARD-LOOKING STATEMENTS  Form 10-K Form 10-K
 
    the effects of domestic and foreign economic conditions, and
    conditions which affect the market for property and casualty
    insurance;
    changes in the laws, rules and regulations which apply to our
    insurance companies;
    the effects of emerging claim and coverage issues on our
    business, including adverse judicial or regulatory decisions and
    rulings;
    the effects of competition from banks and other insurers and the
    trend toward self-insurance;
    risks that we face in entering new markets and diversifying the
    products and services we offer;
    unexpected turnover of our professional staff;
    changing legal and social trends and inherent uncertainties in
    the loss estimation process that can adversely impact the
    adequacy of loss reserves and the allowance for reinsurance
    recoverables, including our estimates relating to ultimate
    asbestos liabilities and related reinsurance recoverables;
    risks inherent in the collection of reinsurance recoverable
    amounts from our reinsurers over many years into the future
    based on the reinsurers financial ability and intent to
    meet such obligations to the Company;
    risks associated with our continuing ability to obtain
    reinsurance covering our exposures at appropriate prices and/or
    in sufficient amounts and the related recoverability of our
    reinsured losses;
    weather-related events and other catastrophes (including acts of
    terrorism) impacting our insureds and/or reinsurers, including,
    without limitation, the impact of Hurricanes Katrina, Rita and
    Wilma and the possibility that our estimates of losses from
    Hurricanes Katrina, Rita and Wilma will prove to be materially
    inaccurate;
    our ability to attain adequate prices, obtain new business and
    retain existing business consistent with our expectations and to
    successfully implement our business strategy during
    soft as well as hard markets;
    our ability to maintain or improve our ratings to avoid the
    possibility of downgrades in our claims-paying and financial
    strength ratings significantly adversely affecting us, including
    reducing the number of insurance policies we write generally, or
    causing clients who require an insurer with a certain rating
    level to use higher-rated insurers;
    the inability of our internal control framework to provide
    absolute assurance that all incidents of fraud or unintended
    material errors will be detected and prevented;
    changes in accounting principles or policies or in our
    application of such accounting principles or policies;
    the risk that our investment portfolio suffers reduced returns
    or investment losses which could reduce our profitability; and
    other risks that we identify in future filings with the
    Securities and Exchange Commission. Form 10-K
 The discussion and analysis of our financial condition and
    results of operations contained herein should be read in
    conjunction with our consolidated financial statements and
    accompanying notes which appear elsewhere in this
    Form 10-K.
    It contains forward-looking statements that involve risks and
    uncertainties. Please see Note on Forward-Looking
    Statements for more information. Our actual results could
    differ materially from those anticipated in these
    forward-looking statements as a result of various factors,
    including those discussed below and elsewhere in this
    Form 10-K.
  3




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##### Table of Contents



PART I Item 1.
    Description of Business General    Marine
    Insurance
      4




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##### Table of Contents



Specialty
 wrap-up
     Professional
    Liability
   Engineering
    and Construction
   Onshore
    Energy
   Inland
    Marine
   European
    Property Business
  Reinsurance
    Recoverables   5




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##### Table of Contents



A.M. Best

Rating

Recoverable

PercentRating (1)

Description

Amounts

to Total($ millions)A++, A+


Superior

$
637.4


59
%A, A−


Excellent


408.3


38
%B++, B+


Very good


3.0


0
%(2)NR


Not rated


36.6


3
%(2)Total




$
1,085.3


100
%   (1)
    
    Equivalent S&P rating used for
    certain companies when an A.M. Best rating was unavailable.(2)
    
    The Company holds offsetting
    collateral of approximately 33% for B++ and B+ companies and 92%
    for not rated companies which includes letters of credit, ceded
    balances payable and other balances held by our Insurance
    Companies and our Lloyds Operations.  6




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##### Table of Contents



Reinsurance RecoverablesUnearned

Unpaid/Paid



Collateral(1)

Rating &Reinsurer

Premium

Losses

Total

Held

Rating Agency($ in millions)Swiss Reinsurance America Corporation

$
20.5

$
95.6

$
116.1

$
13.6


A+



AMB
(2)Folksamerica Reinsurance Company


21.0


88.7


109.7


45.7


A−



AMBGeneral Reinsurance Corporation


7.1


89.7


96.8





A++



AMBEverest Reinsurance Company


14.6


40.4


55.0


7.5


A+



AMBNational Indemnity Company


11.6


37.8


49.4


11.3


A++



AMBTransatlantic Reinsurance Company


15.6


33.3


48.9


9.5


A+



AMBMunich Reinsurance America Inc.


9.8


32.1


41.9


11.5


A+



AMBMunchener Ruckversicherungs-Gesellschaft


6.2


33.6


39.8


8.6


A+



AMBSwiss Reinsurance Company (UK) Ltd.


5.7


30.7


36.4


8.1


A+



AMBPlatinum Underwriters Re


5.8


27.7


33.5


3.5


A



AMBArch Reinsurance Company


3.8


25.3


29.1


1.0


A



AMBPartner Reinsurance Company of the U.S.


6.1


21.9


28.0


3.9


A+



AMBScor Holding (Switzerland) AG


5.8


20.1


25.9


4.5


A−



AMBFederal Insurance Co.


5.7


15.6


21.3


5.6


A++



AMBBerkley Insurance Company


11.4


9.5


20.9


5.6


A+



AMBArch Reinsurance Limited


5.5


12.0


17.5


17.0


A



AMBAllianz Global Corporate & Specialty AG





16.1


16.1


2.9


A+



AMBHannover Ruckversicherung


1.4


13.2


14.6


1.3


A



AMBAce Property and Casualty Insurance Company


2.3


11.9


14.2


0.5


A+



AMBNational Liability & Fire Insurance Company


0.1


12.3


12.4





A++



AMBTop 20 Total


160.0


667.5


827.5


161.6All Other


29.0


228.8


257.8


91.5Total

$
189.0

$
896.3

$
1,085.3

$
253.1   (1)
    
    Collateral includes letters of
    credit, ceded balances payable and other balances held by our
    Insurance Companies and our Lloyds Operations.(2)
    
    A.M. Best      7




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##### Table of Contents



Loss
    Reserves  case-by-case
      Year Ended December 31,2007


2006


2005($ in thousands)Net reserves for losses and LAE at beginning of year

$
696,116


$
578,976


$
463,788Provision for losses and LAE for claims occurring in the current
    year


387,601



287,401



239,436(Decrease) in estimated losses and LAE for claims occurring in
    prior years


(47,009
)


(17,214
)


(3,781
)Incurred losses and LAE


340,592



270,187



235,655Losses and LAE paid for claims occurring during:Current year


(46,467
)


(19,710
)


(23,486
)Prior years


(142,938
)


(133,337
)


(96,981
)Losses and LAE payments


(189,405
)


(153,047
)


(120,467
)Net reserves for losses and LAE at end of year


847,303



696,116



578,976Reinsurance receivables on unpaid losses and LAE


801,461



911,439



979,015Gross reserves for losses and LAE at end of year

$
1,648,764


$
1,607,555


$
1,557,991   8




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##### Table of Contents



Year Ended December 31,2007


2006


2005($ in thousands)Insurance CompaniesMarine

$
(10,695
)

$
(4,800
)

$
1,912Specialty


(12,091
)


(6,060
)


875Professional Liability


(10,365
)


(1,223
)


(3,045
)Other


(645
)


(649
)


(2,324
)Subtotal Insurance Companies


(33,796
)


(12,732
)


(2,582
)Lloyds Operations


(13,213
)


(4,482
)


(1,199
)Total

$
(47,009
)

$
(17,214
)

$
(3,781
)        9




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##### Table of Contents



Year Ended December 31,1997


1998


1999


2000


2001


2002


2003

2004

2005

2006

2007($ in thousands)Net reserves for losses and LAE

$
139,841


$
150,517


$
170,530


$
174,883


$
202,759


$
264,647


$
374,171

$
463,788

$
578,976

$
696,116

$
847,303Reserves for losses and LAE re-estimated as of:One year later


136,458



159,897



165,536



180,268



209,797



323,282



370,335


460,007


561,762


649,107Two years later


138,991



149,741



160,096



183,344



266,459



328,683



360,964


457,769


523,541Three years later


129,592



142,229



156,322



232,530



266,097



321,213



377,229


432,988Four years later


123,038



138,495



194,924



227,554



256,236



334,991



362,227Five years later


121,208



176,226



190,830



218,982



264,431



325,249Six years later


158,195



172,688



185,075



225,031



260,264Seven years later


155,607



169,294



188,055



221,541Eight years later


154,299



172,256



187,422Nine years later


156,696



171,334Ten years later


156,319Net cumulative redundancy (deficiency)


(16,478
)


(20,817
)


(16,892
)


(46,658
)


(57,505
)


(60,602
)


11,944


30,800


55,435


47,009Net cumulative paid as of:One year later


41,798



38,976



43,301



53,646



64,785



84,385



80,034


96,981


133,337


142,938Two years later


64,301



63,400



71,535



91,352



112,746



133,911



140,644


180,121


219,125Three years later


74,588



79,218



88,570



114,449



138,086



170,236



195,961


238,673Four years later


81,480



89,913



101,667



127,961



159,042



208,266



223,847Five years later


89,066



100,314



108,146



141,384



185,037



226,798Six years later


96,203



103,823



116,752



159,389



196,098Seven years later


98,170



109,771



131,579



171,768Eight years later


101,980



123,092



142,709Nine years later


113,738



132,770Ten years later


122,916Gross liability-end of year


278,432



342,444



391,094



357,674



401,177



489,642



724,612


966,117


1,557,991


1,607,555


1,648,764Reinsurance recoverable


138,591



191,927



220,564



182,791



198,418



224,995



350,441


502,329


979,015


911,439


801,461Net liability-end of year


139,841



150,517



170,530



174,883



202,759



264,647



374,171


463,788


578,976


696,116


847,303Gross re-estimated latest


343,804



387,166



431,004



465,843



524,005



647,807



706,185


890,062


1,450,562


1,511,406Re-estimated recoverable latest


187,485



215,832



243,582



244,302



263,741



322,558



343,958


457,074


927,021


862,299Net re-estimated latest


156,319



171,334



187,422



221,541



260,264



325,249



362,227


432,988


523,541


649,107Gross cumulative redundancy (deficiency)


(65,372
)


(44,722
)


(39,910
)


(108,169
)


(122,828
)


(158,165
)


18,427


76,055


107,429


96,149   10




---



##### Table of Contents



Gross Cumulative
    Redundancy (Deficiency)
  Consolidated


Insurance CompaniesGrand


Excluding








All


LloydsYear Ended

Total


Asbestos


Total


Asbestos


Other(1)


Operations($ in thousands)2006

$
96,149


$
95,369


$
47,632


$
780


$
46,852


$
48,5172005


107,429



106,895



48,719



534



48,185



58,7102004


76,055



58,112



67,970



17,943



50,027



8,0852003


18,427



1,667



17,926



16,760



1,166



5012002


(158,165
)


(97,088
)


(145,613
)


(61,077
)


(84,536
)


(12,552
)2001


(122,828
)


(61,394
)


(111,613
)


(61,434
)


(50,179
)


(11,215
)2000


(108,169
)


(46,487
)


(77,567
)


(61,682
)


(15,885
)


(30,602
)1999


(39,910
)


21,883



(22,534
)


(61,793
)


39,259



(17,376
)1998


(44,722
)


16,918



(31,641
)


(61,640
)


29,999



(13,081
)1997


(65,372
)


(12,357
)


(63,111
)


(53,015
)


(10,096
)


(2,261
)   Net Cumulative
    Redundancy (Deficiency)
  Consolidated


Insurance CompaniesGrand


Excluding








All


LloydsYear Ended

Total


Asbestos


Total


Asbestos


Other(1)


Operations($ in thousands)2006

$
47,009


$
48,788


$
33,796


$
(1,779
)

$
35,575


$
13,2132005


55,435



57,443



38,832



(2,008
)


40,840



16,6032004


30,800



33,337



19,747



(2,537
)


22,284



11,0532003


11,944



14,886



(4,343
)


(2,942
)


(1,401
)


16,2872002


(60,602
)


(25,980
)


(68,206
)


(34,622
)


(33,584
)


7,6042001


(57,505
)


(22,735
)


(56,807
)


(34,770
)


(22,037
)


(698
)2000


(46,658
)


(11,794
)


(37,019
)


(34,864
)


(2,155
)


(9,639
)1999


(16,892
)


18,077



(14,609
)


(34,969
)


20,360



(2,283
)1998


(20,817
)


14,115



(16,447
)


(34,932
)


18,485



(4,370
)1997


(16,478
)


18,471



(13,731
)


(34,949
)


21,218



(2,747
)   (1)
    
    Contains cumulative loss
    development for all active and run-off lines of business
    exclusive of asbestos losses.     11




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##### Table of Contents



years 1998 to 2001, a
    $4.6 million reduction in our 2004 underwriting year
    estimates for the liability book due to favorable loss trends,
    and the remaining $3.2 million was mostly for offshore
    energy and liability business on business underwritten during
    2002.
                12




---



##### Table of Contents



Specialty Liability and Professional Liability.
      Professional
    Liability
    Reported Claims or Notices of Potential Claims
    Related to Subprime Exposure(1)
    December 31, 2007 ($ in
    thousands)
  AverageNumber of

Average

Average

ExcessClaims(2)

Gross Limit

Net Limit(3)

AttachmentPrimary:D&O Securities/Other Claims




$


$
Excess:D&O Securities Claims


4


7,500


4,500

$
37,500D&O Side A Securities Claims


2


5,000


3,500


137,500Other Claims


2


10,000


5,500


35,000Subtotal/Average


8


7,500


4,500Total


8

$
7,500

$
4,500   (1)
    
    There are a total of 29
    professional liability insurance policies with $2.6 million
    of gross written premium written by the Insurance Companies with
    possible or potential exposure to sub-prime issues. None were
    written by our Lloyds Operations.(2)
    
    Claims include all professional
    liability policies written by the Insurance Companies. There are
    no reported claims or notices of potential claims reported for
    the Lloyds Operations. All policies are claims made.
    Defense costs are inside the limits of liability.(3)
    
    Amounts are net of reinsurance.  13




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##### Table of Contents



December 31, 2007Net

Total

% of IBNRNet Reported

IBNR

Net Loss

to Total NetReserves

Reserves

Reserves

Loss Reserves($ in thousands)Insurance Companies:Marine

$
93,110

$
103,229

$
196,339


52.6
%SpecialtyConstruction liability


36,137


213,453


249,590


85.5
%All other liability


28,608


65,361


93,969


69.6
%Total Specialty


64,745


278,814


343,559


81.2
%Professional liability


20,335


50,584


70,919


71.3
%Other (includes run-off business)


13,147


11,717


24,864


47.1
%Total Insurance Companies


191,337


444,344


635,681


69.9
%Lloyds OperationsMarine


89,957


93,069


183,026


50.9
%Other


7,485


21,111


28,596


73.8
%Total Lloyds Operations


97,442


114,180


211,622


54.0
%Total Company

$
288,779

$
558,524

$
847,303


65.9
%    December 31, 2006Net

Total

% of IBNRNet Reported

IBNR

Net Loss

to Total NetReserves

Reserves

Reserves

Loss Reserves($ in thousands)Insurance Companies:Marine

$
83,295

$
96,098

$
179,393


53.6
%SpecialtyConstruction liability


40,070


166,179


206,249


80.6
%All other liability


15,214


39,381


54,595


72.1
%Total Specialty


55,284


205,560


260,844


78.8
%Professional liability


14,013


37,558


51,571


72.8
%Other (includes run-off business)


9,867


9,432


19,299


48.9
%Total Insurance Companies


162,459


348,648


511,107


68.2
%Lloyds OperationsMarine


77,621


95,876


173,497


55.3
%Other


3,103


8,409


11,512


73.0
%Total Lloyds Operations


80,724


104,285


185,009


56.4
%Total Company

$
243,183

$
452,933

$
696,116


65.1
%   Asbestos Liability.
     14




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##### Table of Contents



Year Ended December 31,2007


2006

2005($ in thousands)Gross of ReinsuranceBeginning gross reserves

$
37,171


$
56,838

$
78,421Incurred loss & LAE


(780
)


246


(17,409
)Calendar year payments


13,197



19,913


4,174Ending gross reserves

$
23,194


$
37,171

$
56,838Gross case loss reserves

$
16,014


$
29,291

$
48,958Gross IBNR loss reserves


7,180



7,880


7,880Ending gross reserves

$
23,194


$
37,171

$
56,838Net of ReinsuranceBeginning net reserves

$
21,381


$
30,372

$
31,394Incurred loss & LAE


1,779



229


529Calendar year payments


6,443



9,220


1,551Ending net reserves

$
16,717


$
21,381

$
30,372Net case loss reserves

$
9,715


$
13,678

$
22,669Net IBNR loss reserves


7,002



7,703


7,703Ending net reserves

$
16,717


$
21,381

$
30,372       Hurricanes Katrina and Rita.
  15




---



##### Table of Contents



Year Ended December 31,2007


2006


2005($ in thousands)Gross of ReinsuranceBeginning gross reserves

$
319,230


$
465,728


$
Incurred loss & LAE


(29,349
)






471,027Calendar year payments


148,050



146,498



5,299Ending gross reserves

$
141,831


$
319,230


$
465,728Gross case loss reserves

$
94,959


$
172,916


$
210,579Gross IBNR loss reserves


46,872



146,314



255,149Ending gross reserves

$
141,831


$
319,230


$
465,728Net of ReinsuranceBeginning net reserves

$
10,003


$
19,408


$
Incurred loss & LAE


(1,909
)






22,288Calendar year payments


3,575



9,405



2,880Ending net reserves

$
4,519


$
10,003


$
19,408Net case loss reserves

$
646


$
3,628


$
8,127Net IBNR loss reserves


3,873



6,375



11,281Ending net reserves

$
4,519


$
10,003


$
19,408    Reserves
    for Losses and Loss Adjustment Expenses
 Investments      16




---



##### Table of Contents





Year Ended December 31,2007


2006


2005($ in thousands)Invested Assets and CashInsurance Companies

$
1,421,365


$
1,203,842


$
934,878Lloyds Operations


301,790



239,760



230,432Parent Company


44,146



32,308



16,926Consolidated

$
1,767,301


$
1,475,910


$
1,182,236Net Investment IncomeInsurance Companies

$
58,261


$
47,723


$
31,764Lloyds Operations


10,524



7,694



5,061Parent Company


1,877



1,478



244Consolidated

$
70,662


$
56,895


$
37,069Average Yield (amortized cost basis)Insurance Companies


4.50
%


4.61
%


4.25
%Lloyds Operations


3.85
%


3.37
%


2.42
%Parent Company


4.85
%


5.26
%


2.93
%Consolidated


4.40
%


4.40
%


3.84
%      AAA/Aaa
  17




---



##### Table of Contents



Gross

GrossUnrealized

Unrealized


Cost orDecember 31, 2007

Fair Value

Gains

(Losses)


Amortized Cost($ in thousands)U.S. Government Treasury bonds, GNMAs and foreign government
    bonds

$
234,375

$
5,724

$
(337
)

$
228,988States, municipalities, and political subdivisions


515,883


7,050


(657
)


509,490Mortgage- and asset-backed securities:Non-guaranteed Government Agency bonds


29,818


342


(4
)


29,480Mortgage-backed securities


232,869


1,824


(479
)


231,524Collateralized mortgage obligations


134,899


524


(823
)


135,198Commercial mortgage-backed securities


113,488


544


(1,031
)


113,975Asset-backed securities


64,352


533


(79
)


63,898Subtotal


575,426


3,767


(2,416
)


574,075Corporate bonds


196,636


2,504


(1,804
)


195,936Total fixed maturities


1,522,320


19,045


(5,214
)


1,508,489Equity securitiescommon stocks


67,240


6,452


(4,704
)


65,492Cash


7,056









7,056Short-term investments


170,685









170,685Total

$
1,767,301

$
25,497

$
(9,918
)

$
1,751,722   Gross

GrossUnrealized

Unrealized


Cost orDecember 31, 2006

Fair Value

Gains

(Losses)


Amortized Cost($ in thousands)U.S. Government Treasury bonds, GNMAs and foreign government
    bonds

$
194,210

$
969

$
(1,999
)

$
195,240States, municipalities, and political subdivisions


361,859


2,719


(2,345
)


361,485Mortgage- and asset-backed securities:Non-guaranteed Government Agency bonds


11,998


3


(88
)


12,083Mortgage-backed securities


202,371


176


(2,518
)


204,713Collateralized mortgage obligations


124,508


220


(358
)


124,646Commercial mortgage-backed securities


94,117


330


(1,142
)


94,929Asset-backed securities


68,566


213


(469
)


68,822Subtotal


501,560


942


(4,575
)


505,193Corporate bonds


201,088


1,672


(1,950
)


201,366Total fixed maturities


1,258,717


6,302


(10,869
)


1,263,284Equity securitiescommon stocks


37,828


6,297


(348
)


31,879Cash


2,404









2,404Short-term investments


176,961









176,961Total

$
1,475,910

$
12,599

$
(11,217
)

$
1,474,528    Alt-A Alt-A
 Alt-A AAA/Aaa,
  18




---



##### Table of Contents



Gross

Gross


Cost orFair

Unrealized

Unrealized


AmortizedValue

Gains

(Losses)


Cost($ in thousands)Mortgage-backed securities:FNMA

$
173,773

$
1,539

$
(415
)

$
172,649FHLMC


59,096


285


(64
)


58,875Prime












Alt-A












Subprime












Total

$
232,869

$
1,824

$
(479
)

$
231,524   Gross

Gross


Cost orFair

Unrealized

Unrealized


AmortizedValue

Gains

(Losses)


Cost($ in thousands)Collateralized mortgage obligations:GNMA

$
585

$
7

$



$
578FNMA


11,359


154






11,205FHLMC


13,455


169






13,286Prime


88,628


180


(525
)


88,973Alt-A


20,872


14


(298
)


21,156Subprime












Total

$
134,899

$
524

$
(823
)

$
135,198   Gross

Gross


Cost orFair

Unrealized

Unrealized


AmortizedValue

Gains

(Losses)


Cost($ in thousands)Asset-backed securities:GNMA

$
3,347

$
148

$



$
3,199FNMA












FHLMC












Prime


60,553


385


(54
)


60,222Alt-A












Subprime


452





(25
)


477Total

$
64,352

$
533

$
(79
)

$
63,898   19




---



##### Table of Contents



PercenttoRating Description

Rating

Amount

Total($ in thousands)Extremely Strong

AAA

$
1,296,480


77
%Very Strong

AA


175,369


10
%Strong

A


134,574


8
%Adequate

BBB


62,970


4
%Speculative

BB & below


252


0
%Not Rated

NR


23,360


1
%Total

AA(1)

$
1,693,005


100
%   (1)
    
    weighted average quality rating    Gross

Gross


Cost orFair

Unrealized

Unrealized


AmortizedValue

Gains

(Losses)


Cost($ in thousands)Credit enhanced securities:States, municipalities and political subdivisions

$
272,491

$
3,665

$
(287
)

$
269,113Mortgage- and asset-backed securities


13,047


35


(10
)


13,022Corporate bonds


2,194


3


(27
)


2,218Total

$
287,732

$
3,703

$
(324
)

$
284,353   AverageGross

Gross


Cost or

UnderlyingFair

Unrealized

Unrealized


Amortized

CreditValue

Gains

(Losses)


Cost

Rating($ in thousands)Financial guarantors:AMBAC

$
63,003

$
629

$
(98
)

$
62,472


A
+Assured Guaranty LTD


4,005


68






3,937


AFGIC


54,812


631


(76
)


54,257


AA
−Financial Security Assurance


72,046


1,339


(18
)


70,725


A
+MBIA


76,433


918


(65
)


75,580


AA
−Radian Group, Inc


7,681


78


(55
)


7,658


AA
−XL Capital


9,752


40


(12
)


9,724


ATotal

$
287,732

$
3,703

$
(324
)

$
284,353


AA
−      20




---



##### Table of Contents



default, or if some of the
    securities did default, they would not have a material adverse
    effect on the Companys financial condition or results of
    operations. However, since the ratings would be reduced, it is
    likely that the market values would decrease to reflect such
    lower ratings.


NetUnrealized


% ofTop Ten Corporate Issuer Holdings

Fair Value

Gains/(Losses)


Fixed Maturities($ in thousands)Goldman Sachs Group, Inc.

$
5,403

($
27
)


0.4
%General Electric Co.


4,525


108



0.3
%Merrill Lynch & Co.


3,907


(80
)


0.3
%Morgan Stanley


3,614


(23
)


0.2
%Citigroup, Inc.


3,550


(72
)


0.2
%Mellon Financial Corp.


3,202


6



0.2
%American International Group, Inc.


3,162


42



0.2
%AT&T, Inc.


3,061


(27
)


0.2
%Commerzbank AG


2,995


51



0.2
%Mitsubishi UFJ Financial Group, Inc


2,968


(72
)


0.2
%   21




---



##### Table of Contents



December 31, 2007

December 31, 2006Gross



GrossFair

Unrealized

Fair

UnrealizedValue

Loss

Value

Loss($ in thousands)Fixed Maturities:US Government Treasury bonds, GNMAs and foreign government bonds0-6 Months

$
4,119

$
32

$
34,085

$
5867-12 Months








20,806


86> 12 Months


19,587


305


69,424


1,327Subtotal


23,706


337


124,315


1,999States, municipalities and political subdivisions0-6 Months


21,853


67


57,747


3167-12 Months


6,045


115


6,661


80> 12 Months


69,671


475


118,917


1,949Subtotal


97,569


657


183,325


2,345Mortgage- and asset-backed securities (excluding GNMAs)0-6 Months


61,388


515


174,270


9217-12 Months


48,496


423


10,444


65> 12 Months


121,798


1,478


184,515


3,589Subtotal


231,682


2,416


369,229


4,575Corporate bonds0-6 Months


20,722


255


27,719


1857-12 Months


25,520


974


15,503


224> 12 Months


38,865


575


66,014


1,541Subtotal


85,107


1,804


109,236


1,950Total Fixed Maturities

$
438,064

$
5,214

$
786,105

$
10,869Equity securitiescommon stocks0-6 Months

$
26,257

$
3,494

$
3,265

$
1587-12 Months


4,153


1,209


800


72> 12 Months


53


1


782


118Total Equity Securities

$
30,463

$
4,704

$
4,847

$
348      22




---



##### Table of Contents





GrossEquivalent

Equivalent

Unrealized Loss


Fair ValueNAIC

S&P

Moodys



Percent




PercentRating

Rating

Rating

Amount

to Total


Amount

to Total($ in thousands)1

AAA/AA/A

Aaa/Aa/A

$
4,630


89
%

$
417,260


95
%2

BBB

Baa


584


11
%


20,804


5
%3

BB

Ba












4

B

B












5

CCC or lower

Caa or lower












6

N/A

N/A












Total

$
5,214


100
%

$
438,064


100
%      GrossUnrealized Loss


Fair ValuePercent




PercentAmount


to Total


Amount

to Total($ in thousands)Due in one year or less

$
61



1
%

$
29,818


7
%Due after one year through five years


562



11
%


68,752


16
%Due after five years through ten years


1,039



20
%


48,400


11
%Due after ten years


1,136



22
%


59,412


14
%Mortgage- and asset-backed securities


2,416



46
%


231,682


52
%Total fixed income securities

$
5,214



100
%

$
438,064


100
%     23




---



##### Table of Contents



Year Ended December 31,2007


2006


2005($ in thousands)Fixed maturities:Gains

$
1,320


$
743


$
1,932(Losses)


(1,749
)


(2,385
)


(1,680
)(429
)


(1,642
)


252Equity securities:Gains


3,626



714



1,149(Losses)


(1,191
)


(98
)


(163
)2,435



616



986Net realized capital gains (losses)

$
2,006


$
(1,026
)

$
1,238     # of MonthsUnrealized LossNet

Exceeded 20%Date of

Proceeds

(Loss) on





Holdings at

Unrealized

of Cost orDescription

Sale/Impairment

from Sale

Sale


Impairment


December 31,

(Loss)

Amortized Cost($ in thousands)Year ended December 31, 2007:MBIA, Inc.(1)


12/31/07









$
(655
)

$
627





1CAPMARK Financial Gp.(2)


8/22/07


$
1,614

$
(330
)TIPS(3)


3/31/07


$
5,823

$
(335
)












Year ended December 31, 2006:TIPS(3)


Various


$
15,418

$
(618
)












Year ended December 31, 2005:None   (1)
    
    Bond insurer was considered
    impaired at year-end due to losses related to the subprime
    crisis.(2)
    
    CAPMARK Financial Group securities
    were sold due to credit concerns.(3)
    
    Treasury inflation protection
    securities were sold during 2007 and 2006 due to the widening
    breakeven yield spread between TIPS and treasuries.  Ratings      24




---



##### Table of Contents



Regulation  United
    States
   Form 10-K.
         25




---



##### Table of Contents



United
    Kingdom
   26




---



##### Table of Contents



Competition    Employees  Available
    Information on the Internet   27




---



##### Table of Contents



1-800-SEC-0330. http://www.navg.com/finance/sec_filings.phtml, Form 10-K, Form 10-Q, Form 8-K,
 Item 1A.
    Risk Factors You should carefully consider each of the risks and
    uncertainties described below and elsewhere in this Annual
    Report on
    Form 10-K,
    as well as any amendments or updates reflected in subsequent
    filings with the SEC. We believe these risks and uncertainties,
    individually or in the aggregate, could cause our actual results
    to differ materially from expected and historical results and
    could materially and adversely affect our business operations.
    Further, additional risks and uncertainties not presently known
    to us or that we currently deem immaterial may also impair our
    results and business operations.
  Our business is
    concentrated in marine and energy, general liability and
    professional liability insurance, and if market conditions
    change adversely, or we experience large losses in these lines,
    it could have a material adverse effect on our
    business.
   We are exposed to
    cyclicality in our business that may cause material fluctuations
    in our results.
   We may not be
    successful in developing our new specialty lines which could
    cause us to experience losses.
   We may be unable
    to manage effectively our rapid growth in our lines of business,
    which may adversely affect our results.
   28




---



##### Table of Contents



We may incur
    additional losses if our loss reserves are
    insufficient.
    In addition to
    loss reserves, preparation of our financial statements requires
    us to make many estimates and judgments.
   We may not have
    access to adequate reinsurance to protect us against
    losses.
   Our reinsurers,
    including the other participants in the marine pool, may not pay
    on losses in a timely fashion, or at all, which may increase our
    costs.
    Intense
    competition for our products could harm our ability to maintain
    or increase our profitability and premium volume.
   29




---



##### Table of Contents



We may be unable
    to attract and retain qualified employees.
   Increases in
    interest rates may cause us to experience losses.
   Our investment
    portfolio is subject to certain risks that could adversely
    affect our results of operations and/or financial
    condition.
   We are exposed to
    significant capital market risks related to changes in interest
    rates, credit spreads, equity prices and foreign exchange rates
    which may adversely affect our results of operations, financial
    condition or cash flows.
        30




---



##### Table of Contents



Capital may not
    be available in the future, or available on unfavorable
    terms.
   A downgrade in
    our ratings could adversely impact the competitive positions of
    our operating businesses.
    Continued or
    increased premium levies by Lloyds for the Lloyds
    Central Fund and cash calls for trust fund deposits or a
    significant downgrade of Lloyds A.M. Best rating
    could materially and adversely affect us.
       Our businesses
    are heavily regulated, and changes in regulation may reduce our
    profitability and limit our growth.
   31




---



##### Table of Contents



The inability of
    our subsidiaries to pay dividends to us in sufficient amounts
    would harm our ability to meet our obligations.
   Catastrophe
    losses could materially reduce our profitability.
   The market price
    of Navigators common stock may be volatile.
  
    actual or anticipated variations in our quarterly results of
    operations, including the result of catastrophes,
    changes in market valuations of companies in the insurance and
    reinsurance industry,
    changes in expectations of future financial performance or
    changes in estimates of securities analysts,
    issuances of common shares or other securities in the future,
    the addition or departure of key personnel, and
    announcements by us or our competitors of acquisitions,
    investments or strategic alliances.  Item 1B.
    Unresolved Staff Comments  Item 2.
    Properties   32




---



##### Table of Contents



Item 3.
    Legal Proceedings   Item 4.
    Submission Of Matters To A Vote Of Security Holders  PART II Item 5.
    Market For Companys Common Equity, Related Stockholder
    Matters And Issuer Purchases Of Equity Securities  Market
    Information
 mark-up,
    2007

2006High

Low

Close

High

Low

CloseFirst Quarter

$
53.16

$
45.41

$
50.17

$
49.99

$
43.00

$
49.60Second Quarter

$
54.16

$
47.52

$
53.90

$
50.22

$
39.38

$
43.82Third Quarter

$
55.45

$
45.86

$
54.25

$
48.40

$
39.49

$
48.01Fourth Quarter

$
66.53

$
53.25

$
65.00

$
49.66

$
45.77

$
48.18     33




---



##### Table of Contents



Five Year Stock
    Performance Graph
   
  Base

Cumulative Indexed ReturnsPeriod

Years Ending December 31,Company / Index

2002

2003

2004

2005

2006

2007The Navigators Group, Inc.


100


134.51


131.20


190.02


209.93


283.22S&P 500 Index


100


128.68


142.69


149.70


173.34


182.86S&P 500 Property & Casualty Insurance


100


126.41


139.58


160.68


181.36


156.04      Annual Return PercentageYears Ending December 31,Company / Index

2003

2004

2005

2006

2007The Navigators Group, Inc.


34.51


−2.46


44.84


10.48


34.91S&P 500 Index


28.68


10.88


4.91


15.79


5.49S&P 500 Property & Casualty Insurance


26.41


10.42


15.11


12.87


−13.96   Dividends
   34




---



##### Table of Contents



Recent Sales of
    Unregistered Securities
   Use of Proceeds
    from Public Offering of Debt Securities
 Form 8-K Form 10-Q
  Purchases of
    Equity Securities by the Issuer
   35




---



##### Table of Contents



Item 6.
    Selected Financial Data Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations Financial Statements and
    Supplementary Data Form 10-K.
  Year Ended December 31,2007


2006


2005


2004


2003($ in thousands, except per share data)Operating Information:Gross written premium

$
1,070,707


$
970,790


$
779,579


$
696,146


$
606,492Net written premium


645,796



520,807



380,659



312,730



307,128Net earned premium


601,977



468,323



338,551



310,995



277,651Net investment income


70,662



56,895



37,069



26,795



19,550Net realized capital gains (losses)


2,006



(1,026
)


1,238



922



1,875Total revenues


676,659



526,594



385,219



343,029



304,718Income before income taxes


139,182



106,617



33,754



52,092



2,792Net income


95,620



72,563



23,564



34,865



7,685Net income per share:Basic

$
5.69


$
4.34


$
1.74


$
2.77


$
0.81Diluted

$
5.62


$
4.30


$
1.73


$
2.74


$
0.80Average common shares (000s):Basic


16,812



16,722



13,528



12,598



9,446Diluted


17,005



16,856



13,657



12,715



9,585Combined loss & expense ratio(1):Loss ratio


56.6
%


57.7
%


69.6
%


60.5
%


76.0
%Expense ratio


30.9
%


30.1
%


31.7
%


31.7
%


30.6
%Total


87.5
%


87.8
%


101.3
%


92.2
%


106.6
%Balance Sheet Information (at end of year):Total investments and cash

$
1,767,301


$
1,475,910


$
1,182,236


$
854,933


$
693,592Total assets


3,143,771



2,956,686



2,583,249



1,756,678



1,379,458Gross loss and LAE reserves


1,648,764



1,607,555



1,557,991



966,117



724,612Net loss and LAE reserves


847,303



696,116



578,976



463,788



374,171Senior Notes


123,673



123,560











Stockholders equity


662,106



551,343



470,238



328,578



290,028Common shares outstanding (000s)


16,873



16,736



16,617



12,657



12,535Book value per share(2)

$
39.24


$
32.94


$
28.30


$
25.96


$
23.14Statutory surplus of Navigators Insurance Company

$
578,668


$
524,188


$
356,484


$
235,561


$
210,324   (1)
    
    Calculated based on earned premium.(2)
    
    Calculated as stockholders
    equity divided by actual shares outstanding as of the date
    indicated.  36




---



##### Table of Contents



Item 7.
    Managements Discussion And Analysis Of Financial
    Condition And Results Of Operations The following discussion and analysis of our financial
    condition and results of operations should be read in
    conjunction with our consolidated financial statements and
    accompanying notes which appear elsewhere in this
    Form 10-K.
    It contains forward-looking statements that involve risks and
    uncertainties. Please see Note on Forward-Looking
    Statements and Risk Factors for more
    information. Our actual results could differ materially from
    those anticipated in these forward-looking statements as a
    result of various factors, including those discussed below and
    elsewhere in this
    Form 10-K.
 Overview        37




---



##### Table of Contents



Catastrophe Risk
    Management      38




---



##### Table of Contents



Hurricanes
    Katrina, Rita and Wilma    Hurricane


HurricaneKatrina


Rita


Total($ in thousands)Reduction in net earned premiums for reinstatement costs

$
11,149


$
3,316


$
14,465Gross losses incurred


261,661



209,366



471,027Reinsurance recoverable


249,838



198,901



448,739Net losses incurred


11,823



10,465



22,288Underwriting loss

$
22,972


$
13,781


$
36,753After-tax net loss

$
14,932


$
8,958


$
23,890Reduction in earnings per share

$
1.10


$
0.65


$
1.75Effect on combined ratio:Loss and LAE ratio


5.5
%


3.7
%


9.2
%Expense ratio


1.0
%


0.3
%


1.3
%Combined ratio


6.5
%


4.0
%


10.5
%        Critical
    Accounting Policies   39




---



##### Table of Contents



Reserves for Losses and LAE. Reserves for
    Losses and Loss Adjustment Expenses
 Reinsurance Recoverables. Reinsurance
 Written and Unearned Premium. Organization and Summary
    of Significant Accounting Policies Reinsurance
   Deferred Tax Assets. Organization and Summary of Significant
    Accounting Policies Income Taxes
 Impairment of Investment Securities.
  40




---



##### Table of Contents



Investments
   Accounting for Lloyds Results. Organization and Summary of Significant Accounting
    Policies
 Translation of Foreign Currencies. Foreign Currency Translation, accumulated other comprehensive
    income
 other income (expense)
 Results of
    Operations and Overview     41




---



##### Table of Contents



2007
    Results
     2006
    Results
     2005
    Results
     42




---



##### Table of Contents



Revenues.
  Year Ended December 31,2007

2006

2005Gross




Net

Net

Gross




Net

Net

Gross





Net


NetWritten




Written

Earned

Written




Written

Earned

Written





Written


EarnedPremium

%


Premium

Premium

Premium

%


Premium

Premium

Premium


%


Premium


Premium($ in thousands)Insurance Companies:Marine

$
266,647


24.9
%

$
137,724

$
133,452

$
266,351


27.4
%

$
128,920

$
115,093

$
233,688



29.9
%

$
88,591


$
83,499Specialty


381,393


35.6
%


263,433


243,915


311,376


32.1
%


195,104


172,479


210,483



27.0
%


145,199



117,208Professional Liability


99,556


9.3
%


59,117


55,149


92,760


9.6
%


51,192


41,437


86,929



11.2
%


35,626



30,118Other(1)


26,750


2.5
%


17,744


10,940


2,359


0.2
%


963


714


(1,419
)


−0.2
%


(1,671
)


(779
)Insurance Cos. Total


774,346


72.3
%


478,018


443,456


672,846


69.3
%


376,179


329,723


529,681



67.9
%


267,745



230,046Lloyds Operations:Marine


225,216


21.0
%


131,430


132,443


245,134


25.3
%


127,636


130,644


207,170



26.6
%


99,797



102,632Professional Liability


34,281


3.2
%


23,349


17,659


21,759


2.2
%


9,016


4,237


6,646



0.9
%


2,613



1,240Other(2)


36,864


3.5
%


12,999


8,419


31,051


3.2
%


7,976


3,719


34,567



4.4
%


10,504



4,633Lloyds Ops Total


296,361


27.7
%


167,778


158,521


297,944


30.7
%


144,628


138,600


248,383



31.9
%


112,914



108,505Intercompany elimination





0.0
%











0.0
%








1,515



0.2
%






Total

$
1,070,707


100.0
%

$
645,796

$
601,977

$
970,790


100.0
%

$
520,807

$
468,323

$
779,579



100.0
%

$
380,659


$
338,551   (1)
    
    Includes inland marine, European
    property and run-off business.(2)
    
    Includes European property,
    engineering and construction business.  Gross Written
    Premium
  Insurance Companies
    Gross Written Premium
 Marine Premium.
  2007


2006


2005Marine liability


32
%


32
%


33
%Offshore energy


19
%


20
%


18
%Cargo


11
%


10
%


10
%P&I


10
%


9
%


6
%Bluewater hull


9
%


7
%


8
%Transport


7
%


10
%


12
%Craft/fishing vessels


6
%


6
%


6
%Other


6
%


6
%


7
%Total


100
%


100
%


100
%     43




---



##### Table of Contents



Specialty Premium.
  2007


2006


2005Construction liability


47
%


51
%


62
%Excess casualty


15
%


17
%


12
%Primary casualty


13
%


7
%


0
%Commercial middle markets


12
%


12
%


11
%Personal umbrella


10
%


11
%


12
%Other


3
%


2
%


3
%Total


100
%


100
%


100
%   Professional Liability Premium.
  2007


2006


2005D&O (public and private)


68
%


68
%


54
%Lawyers and other professionals


25
%


24
%


36
%Architects and engineers


7
%


8
%


10
%Total


100
%


100
%


100
%     Other Premium.
  Lloyds
    Operations Gross Written Premium
  Marine Premium.
  2007


2006


2005Cargo and specie


39
%


43
%


36
%Offshore energy


22
%


24
%


15
%Marine liability


21
%


19
%


19
%Assumed reinsurance


11
%


7
%


9
%Hull


6
%


6
%


5
%Other


1
%


1
%


16
%Total


100
%


100
%


100
%     Professional Liability Premium.
  2007


2006


2005E&O


52
%


52
%


0
%D&O (public and private)


48
%


48
%


100
%Total


100
%


100
%


100
%   Other Premium.
  44




---



##### Table of Contents



Ceded Written Premium


2007


2006


2005% of




% of




% ofCeded

Gross


Ceded

Gross


Ceded

GrossWritten

Written


Written

Written


Written

WrittenPremium

Premium


Premium

Premium


Premium

Premium($ in thousands)Insurance CompaniesMarine

$
128,923


48.3
%

$
137,431


51.6
%

$
145,097


62.1
%Specialty


117,960


30.9
%


116,272


37.3
%


65,284


31.0
%Professional Liability


40,439


40.6
%


41,568


44.8
%


51,303


59.0
%Other (includes run-off)


9,006


33.7
%


1,396


59.2
%


252


NMSubtotal


296,328


38.3
%


296,667


44.1
%


261,936


49.5
%Lloyds OperationsMarine


93,786


41.6
%


117,498


47.9
%


107,373


51.8
%Professional Liability


10,932


31.9
%


12,743


58.6
%


4,033


60.7
%Other


23,865


64.7
%


23,075


74.3
%


24,063


69.6
%Subtotal


128,583


43.4
%


153,316


51.5
%


135,469


54.5
%Intercompany elimination





NM






NM



1,515


100.0
%Total

$
424,911


39.7
%

$
449,983


46.4
%

$
398,920


51.2
%   NM = not meaningful
    
    Modest reductions in the amounts of marine insurance ceded on a
    pro rata basis by the Insurance Companies.
    Increases in our net retentions on the professional liability
    pro rata reinsurance treaty which renewed April 1, 2006. No
    changes occurred for the April 1, 2007 renewal.
    An increase in the proportion of specialty gross written
    premium, in which we retain a higher proportion of premium
    relative to our other lines, to the overall total gross written
    premium. In addition, effective April 1, 2007, the Company
    increased its retention from $500,000 to $1 million for the
    contractors liability business which reduced the amount of
    premium ceded. Somewhat offsetting retaining more contractors
    liability premium, the Company generally reinsures a large
    percentage of its new lines of business and increases its
    retention as the business matures over time.
    Reductions in the amount of business ceded on a pro rata basis
    by the Lloyds Operations coupled with reductions in
    reinsurer participation in our Syndicate 1221 stamp capacity.  
    Retaining more premiums in our marine unit.
    Restructuring our professional liability reinsurance to retain
    more business net effective April 1, 2006.
    Purchased the 2.5% minority interest and replaced a 5% capacity
    provider with our own letter of credit in Syndicate 1221
    effective January 1, 2006. Net Written Premium.
 Net Earned Premium.
  45




---



##### Table of Contents



Commission Income.
 Net Investment Income.
 Net Realized Capital Gains (Losses).
 Other Income/(Expense).
 Operating Expenses.
 Net Losses and Loss Adjustment Expenses Incurred.
   46




---



##### Table of Contents





Year Ended December 31,2007


2006


2005($ in thousands)Gross of ReinsuranceBeginning gross reserves

$
319,230


$
465,728


$
Incurred loss & LAE


(29,349
)






471,122Calendar year payments


148,050



146,498



5,394Ending gross reserves

$
141,831


$
319,230


$
465,728Gross case loss reserves

$
94,959


$
172,916


$
210,579Gross IBNR loss reserves


46,872



146,314



255,149Ending gross reserves

$
141,831


$
319,230


$
465,728Net of ReinsuranceBeginning net reserves

$
10,003


$
19,408


$
Incurred loss & LAE


(1,909
)






22,295Calendar year payments


3,575



9,405



2,887Ending net reserves

$
4,519


$
10,003


$
19,408Net case loss reserves

$
646


$
3,628


$
8,127Net IBNR loss reserves


3,873



6,375



11,281Ending net reserves

$
4,519


$
10,003


$
19,408     December 31,

December 31,2007

2006

Change($ in thousands)Gross reserves for losses and LAE

$
1,648,764

$
1,607,555

$
41,209Less: Reinsurance recoverable on unpaid losses and LAE reserves


801,461


911,439


(109,978
)Net loss and LAE reserves

$
847,303

$
696,116

$
151,187   47




---



##### Table of Contents



December 31, 2007Net

Net

Total

% of IBNRReported

IBNR

Net Loss

to Total NetReserves

Reserves

Reserves

Loss Reserves($ in thousands)Insurance Companies:Marine

$
93,110

$
103,229

$
196,339


52.6
%SpecialtyConstruction liability


36,137


213,453


249,590


85.5
%All other liability


28,608


65,361


93,969


69.6
%Total Specialty


64,745


278,814


343,559


81.2
%Professional liability


20,335


50,584


70,919


71.3
%Other


13,147


11,717


24,864


47.1
%Total Insurance Companies


191,337


444,344


635,681


69.9
%Lloyds Operations:Marine


89,957


93,069


183,026


50.9
%Other


7,485


21,111


28,596


73.8
%Total Lloyds Operations


97,442


114,180


211,622


54.0
%Total

$
288,779

$
558,524

$
847,303


65.9
%   December 31, 2006Net

Net

Total

% of IBNRReported

IBNR

Net Loss

to Total NetReserves

Reserves

Reserves

Loss Reserves($ in thousands)Insurance Companies:Marine

$
83,295

$
96,098

$
179,393


53.6
%SpecialtyConstruction liability


40,070


166,179


206,249


80.6
%All other liability


15,214


39,381


54,595


72.1
%Total Specialty


55,284


205,560


260,844


78.8
%Professional liability


14,013


37,558


51,571


72.8
%Other


9,867


9,432


19,299


48.9
%Total Insurance Companies


162,459


348,648


511,107


68.2
%Lloyds Operations:Marine


77,621


95,876


173,497


55.3
%Other


3,103


8,409


11,512


73.0
%Total Lloyds Operations


80,724


104,285


185,009


56.4
%Total

$
243,183

$
452,933

$
696,116


65.1
%        48




---



##### Table of Contents



recoverability of the receivables.
    Losses incurred on business recently written are primarily
    covered by reinsurance agreements written by companies with whom
    the Company is currently doing reinsurance business and whose
    credit the Company continues to assess in the normal course of
    business.


December 31,

December 31,2007

2006

Change($ in thousands)Gross reserves for losses and LAE

$
1,648,764

$
1,607,555

$
41,209Less: Reinsurance recoverable on unpaid losses and LAE reserves


801,461


911,439


(109,978
)Net loss and LAE reserves

$
847,303

$
696,116

$
151,187         Loss ratio method:
 Bornheutter-Ferguson method:
  49




---



##### Table of Contents



Loss development method:
 Frequency/severity method:
   Marine:
  Specialty:
   50




---



##### Table of Contents



Professional liability:
   Other:
  51




---



##### Table of Contents



in runoff since 1999, which are
    periodically monitored and evaluated by claims and actuarial
    personnel.
 Lloyds Operations:
     Prior Year
    Reserve Redundancies/Deficiencies
         52




---



##### Table of Contents



Sensitivity
    Analysis
      53




---



##### Table of Contents



relatively small contribution to
    the overall IBNR loss reserve amount at December 31, 2007.
    Such underwriting years are therefore deemed to be less likely
    to cause a material deviation to the Companys overall loss
    reserve position. There can be no assurance, however, that
    actual reserve development will be materially consistent with
    either the original or the adjusted expected loss ratios or loss
    development factor assumptions, or with other assumptions made
    in the reserving process, or that a material deviation in loss
    reserves will not occur for underwriting years prior to 2000.


Reasonably Likely
    Loss Ratio Point Variances:
  Decrease

IncreaseMarine

6

6Specialty

7

5Professional Liability

18

13Lloyds Operations

9

4      Reasonably Likely
    Ultimate Loss Development Factor Variances:
  Decrease


IncreaseMarine


11
%


14
%Specialty


10
%


11
%Professional Liability


5
%


6
%Lloyds Operations


14
%


13
%   product-by-product
    54




---



##### Table of Contents



Sensitivity Analysis
    December 31, 2007 ($ in thousands, except per share)
  Total

Reasonably Likely Range of DeviationNet Loss

Redundancy


DeficiencyReserves

Amount

%


Amount


%Insurance Companies:Marine

$
196,339

$
12,351


6
%

$
13,701



7
%Specialty


343,559


28,774


8
%


23,337



7
%Professional Liability


70,919


6,657


9
%


5,454



8
%Other


24,864Total Insurance Companies


635,681


47,782


8
%


42,492



7
%Lloyds Operations:Marine and Other


211,622


20,337


10
%


12,066



6
%Total Company

$
847,303

$
68,119


8
%

$
54,558



6
%Increase (decrease) to net income:Amount




$
44,277





($
35,463
)Per
    share(1)




$
2.60





($
2.09
)   (1)
    
    Used 17,005,000 average diluted
    shares outstanding for the year ended December 31, 2007.  Commission Expense.
 Other Operating Expenses.
 Interest Expense.
 Income Taxes.
 non-U.S. non-U.S.
  55




---



##### Table of Contents



non-U.S.
  Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
 Segment
    Information      Insurance
    Companies
   56




---



##### Table of Contents



Year Ended December 31,2007


2006


2005($ in thousands)Gross written premium

$
774,346


$
672,846


$
529,681Net written premium


478,018



376,179



267,745Net earned premium


443,456



329,723



230,046Net losses and loss adjustment expenses


(256,652
)


(191,740
)


(155,293
)Commission expense


(52,490
)


(36,412
)


(22,984
)Other operating expenses


(81,053
)


(62,459
)


(52,353
)Commission income and other income (expense)


1,510



3,552



4,712Underwriting profit


54,771



42,664



4,128Investment income


58,261



47,723



31,764Net realized capital gains (losses)


1,973



(622
)


1,705Income before income tax expense


115,005



89,765



37,597Income tax expense


35,061



28,843



11,535Net income

$
79,944


$
60,922


$
26,062Identifiable assets

$
2,322,647


$
2,105,293


$
1,793,064Loss and loss expenses ratio


57.9
%


58.2
%


67.5
%Commission expense ratio


11.8
%


11.0
%


10.0
%Other operating expenses ratio(1)


17.9
%


17.9
%


20.7
%Combined ratio


87.6
%


87.1
%


98.2
%   (1)
    
    Includes other operating
    expensesand commission income and other income
    (expense).    Year Ended December 31, 2007($ in thousands)Net

LossesEarned

and LAE

Underwriting

Underwriting


Loss


Expense


CombinedPremium

Incurred

Expenses

Gain(Loss)


Ratio


Ratio


RatioMarine

$
133,452

$
77,593

$
39,180

$
16,679



58.1
%


29.4
%


87.5
%Specialty


243,915


136,220


66,206


41,489



55.8
%


27.1
%


82.9
%Professional Liability


55,149


32,602


19,646


2,901



59.1
%


35.6
%


94.7
%Other


10,940


10,237


7,001


(6,298
)


NM



NM



NMTotal

$
443,456

$
256,652

$
132,033

$
54,771



57.9
%


29.7
%


87.6
%   Year Ended December 31, 2006($ in thousands)Net

LossesEarned

and LAE

Underwriting

Underwriting


Loss


Expense


CombinedPremium

Incurred

Expenses

Gain(Loss)


Ratio


Ratio


RatioMarine

$
115,093

$
65,856

$
31,339

$
17,898



57.2
%


27.2
%


84.4
%Specialty


172,479


99,112


50,138


23,229



57.5
%


29.1
%


86.6
%Professional Liability


41,437


26,756


12,648


2,033



64.6
%


30.5
%


95.1
%Other


714


16


1,194


(496
)


NM



NM



NMTotal

$
329,723

$
191,740

$
95,319

$
42,664



58.2
%


28.9
%


87.1
%    57




---



##### Table of Contents



Year Ended December 31, 2005($ in thousands)Net


LossesEarned


and LAE


Underwriting

Underwriting


Loss


Expense


CombinedPremium


Incurred


Expenses

Gain(Loss)


Ratio


Ratio


RatioMarine

$
83,499


$
68,184


$
24,620

$
(9,305
)


81.7
%


29.5
%


111.2
%Specialty


117,208



71,139



36,353


9,716



60.7
%


31.0
%


91.7
%Professional Liability


30,118



18,292



9,637


2,189



60.7
%


32.0
%


92.7
%Other


(779
)


(2,322
)


15


1,528



NM



NM



NMTotal

$
230,046


$
155,293


$
70,625

$
4,128



67.5
%


30.7
%


98.2
%NM=not meaningful            Year Ended December 31,2007


2006

2005($ in thousands)Gross of ReinsuranceBeginning gross reserves

$
121,896


$
195,724

$
Incurred loss & LAE


23,579






198,500Calendar year payments


53,235



73,828


2,776Ending gross reserves

$
92,240


$
121,896

$
195,724Gross case loss reserves

$
63,382


$
66,860

$
111,822Gross IBNR loss reserves


28,858



55,036


83,902Ending gross reserves

$
92,240


$
121,896

$
195,724Net of ReinsuranceBeginning net reserves

$
1,837


$
6,023

$
Incurred loss & LAE


1,495






7,431Calendar year payments


(168
)


4,186


1,408Ending net reserves

$
3,500


$
1,837

$
6,023Net case loss reserves

$



$


$
4,670Net IBNR loss reserves


3,500



1,837


1,353Ending net reserves

$
3,500


$
1,837

$
6,023   58




---



##### Table of Contents



Lloyds
    Operations
    Liquidity and
    Capital Resources
   59




---



##### Table of Contents



Year Ended December 31,2007


2006


2005($ in thousands)Gross written premium

$
296,361


$
297,944


$
248,383Net written premium


167,778



144,628



112,914Net earned premium


158,521



138,600



108,505Net losses and loss adjustment expenses


(83,940
)


(78,447
)


(80,362
)Commission expense


(25,123
)


(21,375
)


(19,687
)Other operating expenses


(29,356
)


(23,296
)


(20,786
)Commission income and other income (expense)


504



(1,150
)


3,649Underwriting profit (loss)


20,606



14,332



(8,681
)Investment income


10,524



7,694



5,061Net realized capital gains (losses)


33



(404
)


(467
)Income (loss) before income tax expense (benefit)


31,163



21,622



(4,087
)Income tax expense (benefit)


10,946



7,601



(1,431
)Net income (loss)

$
20,217


$
14,021


$
(2,656
)Identifiable assets

$
744,002


$
806,948


$
773,079Loss and loss expenses ratio


53.0
%


56.6
%


74.1
%Commission expense ratio


15.8
%


15.4
%


18.1
%Other operating expenses ratio(1)


18.2
%


17.6
%


15.8
%Combined ratio


87.0
%


89.6
%


108.0
%   (1)
    
    Includes other operating
    expensesand commission income and other income
    (expense).         60




---



##### Table of Contents



Year Ended December 31,2007


2006

2005($ in thousands)Gross of ReinsuranceBeginning gross reserves

$
197,334


$
270,004

$
Incurred loss & LAE


(52,928
)





272,622Calendar year payments


94,815



72,670


2,618Ending gross reserves

$
49,591


$
197,334

$
270,004Gross case loss reserves

$
31,577


$
106,056

$
98,757Gross IBNR loss reserves


18,014



91,278


171,247Ending gross reserves

$
49,591


$
197,334

$
270,004Net of ReinsuranceBeginning net reserves

$
8,166


$
13,385

$
Incurred loss & LAE


(3,404
)





14,864Calendar year payments


3,743



5,219


1,479Ending net reserves

$
1,019


$
8,166

$
13,385Net case loss reserves

$
646


$
3,628

$
3,457Net IBNR loss reserves


373



4,538


9,928Ending net reserves

$
1,019


$
8,166

$
13,385            2007


2006


2005(£ in millions)Syndicate stamp capacity


£140



£123



£135Lloyds Operations corporate capital participation


100.0
%


100.0
%


97.5
%Third party participants


0.0
%


0.0
%


2.5
%Reinsurers participation


5.0
%


10.0
%


14.1
%Lloyds Operations consolidated net participation(1)


95.0
%


90.0
%


83.4
%   (1)
    
    Participation after reinsurance of
    the Lloyds Operations corporate capital vehicles,
    but before other third party reinsurance.   Off-Balance Sheet
    Transactions   61




---



##### Table of Contents



Tabular
    Disclosure of Contractual Obligations   Payments Due by PeriodLess than





More thanContractual Obligations

Total

1 Year

1-3 Years

3-5 Years

5 Years($ in thousands)Reserves for losses and LAE(1)

$
1,648,764

$
596,795

$
608,273

$
233,874

$
209,8227% Senior Notes(2)


199,375


8,750


17,500


17,500


155,625Operating Leases


55,283


5,859


18,612


11,110


19,702Total

$
1,903,422

$
611,404

$
644,385

$
262,484

$
385,149   (1)
    
    The amounts determined are
    estimates which are subject to a high degree of variation and
    uncertainty, and are not subject to any specific payment
    schedule since the timing of these obligations are not set
    contractually. The amounts in the above table exclude
    reinsurance recoveries of $801 million. See
    BusinessLoss Reserves included herein.(2)
    
    Includes interest payments.  Investments  Liquidity and
    Capital Resources           62




---



##### Table of Contents



reinsurers. Such recoverable
    amounts are anticipated to be billed and collected over the next
    several years as gross losses are paid by the Company.


December 31,2007


2006($ in thousands)Senior debt


$123,673



$123,560Stockholders equity


662,106



551,343Total capitalization


$779,779



$674,903Ratio of debt to total capitalization


15.7
%


18.3
%        63




---



##### Table of Contents



December 31,2007

2006($ in thousands)Cash and investments

$
44,146

$
32,308Investments in subsidiaries


735,351


634,299Goodwill and other intangible assets


2,534


2,534Other assets


6,821


12,939Total assets

$
788,852

$
682,0807% Senior Notes due May 1, 2016

$
123,673

$
123,560Accounts payable and other liabilities


1,615


1,590Accrued interest payable


1,458


1,458Deferred compensation payable





4,129Total liabilities


126,746


130,737Stockholders equity


662,106


551,343Total liabilities and stockholders equity

$
788,852

$
682,080     Economic
    Conditions   64




---



##### Table of Contents



Item 7A.
    Quantitative And Qualitative Disclosures About Market Risk  Market Sensitive
    Instruments and Risk Management
      Interest Rate
    Risk Sensitivity Analysis
        Interest Rate Shift in Basis Points−100


−50


0


+50


+100($ in thousands)December 31, 2007:Total market value

$
1,765,127


$
1,729,235


$
1,693,005


$
1,656,605


$
1,619,867Market value change from base


4.26
%


2.14
%


0.00
%


−2.15
%


−4.32
%Change in unrealized value

$
72,122


$
36,230


$



$
(36,400
)

$
(73,138
)   65




---



##### Table of Contents



Equity Price
    Risk
    December 31,2007

2006($ in thousands)Fair value of equity securities

$
67,240

$
37,828Pre-tax impact of 10 percent decline in market prices for
    equity exposures

$
6,724

$
3,783   Foreign
    currency exchange rate risk
  Item 8.
    Financial Statements And Supplementary Data  Item 9.
    Changes In And Disagreements With Accountants On Accounting
    And Financial Disclosure  Item 9A.
    Controls And Procedures  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
 Rule 13a-15(e)
  Managements
    Report on Internal Control over Financial Reporting
 Rules 13a-15(f).
   Changes in
    Internal Control over Financial Reporting
  Item 9B.
    Other Information  PART III Item 10.
    Directors And Executive Officers Of The Company   66




---



##### Table of Contents



Item 11.
    Executive Compensation  Item 12.
    Security Ownership Of Certain Beneficial Owners And
    Management And Related Stockholder Matters  Item 13.
    Certain Relationships And Related Transactions .
 Item 14.
    Principal Accountant Fees And Services  PART IV Item 15.
    Exhibits And Financial Statement Schedules  a.
    Financial Statements and Schedules:The financial
    statements and schedules that are listed in the accompanying
    Index to Consolidated Financial Statements and Schedules on
    page F-1.b.
    Exhibits:The exhibits that are listed in the
    accompanying Index to Exhibits on the page which immediately
    follows
    page S-8.
    The exhibits include the management contracts and compensatory
    plans or arrangements required to be filed as exhibits to this
    Form 10-K
    by Item 601(a)(10)(iii) of
    Regulation S-K.  67




---



##### Table of Contents



SIGNATURES    
   By:
    /s/  PAUL
    J. MALVASIO        Name

Title

Date/s/  TERENCE
    N. DEEKSTerence
    N. Deeks

Chairman

February 20, 2008/s/  STANLEY
    A. GALANSKIStanley
    A. Galanski

President and Chief Executive Officer (Principal Executive
    Officer)

February 20, 2008/s/  PAUL
    J. MALVASIOPaul
    J. Malvasio

Executive Vice President and Chief Financial Officer (Principal
    Financial Officer)

February 20, 2008/s/  BRADLEY
    D. WILEYBradley
    D. Wiley

Senior Vice President, Financial Compliance Officer and Chief
    Risk Officer (Principal Accounting Officer)

February 20, 2008/s/  H.J.
    MERVYN BLAKENEYH.J.
    Mervyn Blakeney

Director

February 20, 2008/s/  PETER
    A. CHENEYPeter
    A. Cheney

Director

February 20, 2008/s/  ROBERT
    W. EAGER, JR.Robert
    W. Eager, Jr.

Director

February 20, 2008/s/  WILLIAM
    T. FORRESTERWilliam
    T. Forrester

Director

February 20, 2008/s/  LEANDRO
    S. GALBAN, JR.Leandro
    S. Galban, Jr.

Director

February 20, 2008/s/  JOHN
    F. KIRBYJohn
    F. Kirby

Director

February 20, 2008  68




---



##### Table of Contents



Name

Title

Date/s/  MARC
    M. TRACTMarc
    M. Tract

Director

February 20, 2008/s/  ROBERT
    F. WRIGHTRobert
    F. Wright

Director

February 20, 2008   69




---



##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES  Report of Independent Registered Public Accounting Firm


F-2Report of Independent Registered Public Accounting Firm


F-3Consolidated Balance Sheets at December 31, 2007 and
    2006


F-4Consolidated Statements of Income for each of the years in
    the three-year period ended December 31, 2007


F-5Consolidated Statements of Stockholders Equity for each
    of the years in the three-year period ended December 31,
    2007


F-6Consolidated Statements of Comprehensive Income for each of
    the years in the three-year period ended December 31,
    2007


F-7Consolidated Statements of Cash Flows for each of the years
    in the three-year period ended December 31, 2007


F-8Notes to Consolidated Financial Statements


F-9   SCHEDULES:Schedule I


Summary of Consolidated InvestmentsOther Than
    Investments in Related Parties


S-1Schedule II


Condensed Financial Information of Registrant


S-2Schedule III


Supplementary Insurance Information


S-5Schedule IV


Reinsurance


S-6Schedule V


Valuation and Qualifying Accounts


S-7Schedule VI


Supplementary Information Concerning Property-Casualty
    Insurance Operations


S-8   F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
       Internal ControlIntegrated
    Framework
    
   F-2




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  
  Internal ControlIntegrated Framework
    Internal ControlIntegrated
    Framework
     
   F-3




---



##### Table of Contents



THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
 ($ in thousands, except share
    data)
  December 31,2007

2006ASSETSInvestments and cash:Fixed maturities, available-for-sale, at fair value
    (amortized cost: 2007, $1,508,489; 2006, $1,263,284)

$
1,522,320

$
1,258,717Equity securities, available-for-sale, at fair value (cost:
    2007, $65,492; 2006, $31,879)


67,240


37,828Short-term investments, at cost which approximates fair value


170,685


176,961Cash


7,056


2,404Total investments and cash


1,767,301


1,475,910Premiums in course of collection


163,081


163,309Commissions receivable


2,381


3,647Prepaid reinsurance premiums


188,961


179,493Reinsurance receivable on paid losses


94,818


108,878Reinsurance receivable on unpaid losses and loss adjustment
    expense


801,461


911,439Net deferred income tax benefit


29,249


30,422Deferred policy acquisition costs


51,895


41,700Accrued investment income


15,605


13,052Goodwill and other intangible assets


8,084


8,012Other assets


20,935


20,824Total assets

$
3,143,771

$
2,956,686LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Reserves for losses and loss adjustment expenses

$
1,648,764

$
1,607,555Unearned premium


469,481


415,096Reinsurance balances payable


161,829


194,266Senior notes


123,673


123,560Federal income tax payable


10,868


3,934Accounts payable and other liabilities


67,050


60,932Total liabilities


2,481,665


2,405,343Stockholders equity:Preferred stock, $.10 par value, authorized
    1,000,000 shares, none issued





Common stock, $.10 par value, 50,000,000 shares authorized;
    issued and outstanding: 16,873,094 for 2007 and 16,735,898 for
    2006


1,687


1,674Additional paid-in capital


291,616


286,732Retained earnings


355,084


259,464Accumulated other comprehensive income


13,719


3,473Total stockholders equity


662,106


551,343Total liabilities and stockholders equity

$
3,143,771

$
2,956,686   See accompanying notes to
    consolidated financial statements.
  F-4




---



##### Table of Contents



THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOME
 ($ and shares in thousands,
    except net income per share)
  Year Ended December 31,2007


2006


2005Gross written premium

$
1,070,707


$
970,790


$
779,579Revenues:Net written premium

$
645,796


$
520,807


$
380,659(Increase) in unearned premium


(43,819
)


(52,484
)


(42,108
)Net earned premium


601,977



468,323



338,551Commission income


1,736



3,075



5,686Net investment income


70,662



56,895



37,069Net realized capital gains (losses)


2,006



(1,026
)


1,238Other income (expense)


278



(673
)


2,675Total revenues


676,659



526,594



385,219Operating expenses:Net losses and loss adjustment expenses incurred


340,592



270,187



235,655Commission expense


77,613



57,787



42,671Other operating expenses


110,409



85,755



73,139Interest expense


8,863



6,248



Total operating expenses


537,477



419,977



351,465Income before income tax expense (benefit)


139,182



106,617



33,754Income tax expense (benefit):Current


47,963



38,644



15,826Deferred


(4,401
)


(4,590
)


(5,636
)Total income tax expense


43,562



34,054



10,190Net income

$
95,620


$
72,563


$
23,564Net income per common share:Basic

$
5.69


$
4.34


$
1.74Diluted

$
5.62


$
4.30


$
1.73Average common shares outstanding:Basic


16,812



16,722



13,528Diluted


17,005



16,856



13,657   See accompanying notes to
    consolidated financial statements.
  F-5




---



##### Table of Contents



THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF
    STOCKHOLDERS EQUITY
 ($ in thousands)
  Year Ended December 31,2007

2006


2005Preferred StockBalance at beginning and end of period

$


$



$
Common stockBalance at beginning of year

$
1,674

$
1,662


$
1,266Shares issued for public offering









380Shares issued under stock plans


13


12



16Balance at end of period

$
1,687

$
1,674


$
1,662Additional paid-in capitalBalance at beginning of year

$
286,732

$
282,463


$
154,670Shares issued for public offering









123,432Effect of SFAS 123 for stock options


581


1,498



1,046Shares issued under stock plans


4,303


2,771



3,315Balance at end of period

$
291,616

$
286,732


$
282,463Retained earningsBalance at beginning of year

$
259,464

$
186,901


$
163,337Net income for period


95,620


72,563



23,564Balance at end of period

$
355,084

$
259,464


$
186,901Accumulated other comprehensive income (loss)Net unrealized gains (losses) on securities, net of taxBalance at beginning of year

$
849

$
(884
)

$
7,416Change in period


9,337


1,733



(8,300
)Balance at end of period


10,186


849



(884
)Cumulative translation adjustments, net of taxBalance at beginning of year


2,624


96



1,889Net adjustment for period


909


2,528



(1,793
)Balance at end of period


3,533


2,624



96Balance at end of period

$
13,719

$
3,473


$
(788
)Total stockholders equity at end of period

$
662,106

$
551,343


$
470,238   See accompanying notes to
    consolidated financial statements.
  F-6




---



##### Table of Contents



THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 ($ in thousands)
  Year Ended December 31,2007

2006


2005Net income

$
95,620

$
72,563


$
23,564Other comprehensive income (loss):Change in net unrealized gains (losses) on securities, net of
    tax expense (benefit) of $4,858, $1,010 and $(4,469) in 2007,
    2006 and 2005, respectively(1)


9,337


1,733



(8,300
)Change in foreign currency translation gains or (losses), net of
    tax expense (benefit) of $490, $1,361 and $(965) in 2007, 2006
    and 2005, respectively


909


2,528



(1,793
)Other comprehensive income (loss)


10,246


4,261



(10,093
)Comprehensive income

$
105,866

$
76,824


$
13,471(1)  Disclosure of reclassification amount, net of tax:Unrealized holding gains
    (losses) arising during period

$
10,643

$
1,046


$
(7,495
)Less: reclassification
    adjustment for net gains (losses) included in net income


1,306


(687
)


805Change in net unrealized
    gains (losses) on securities, net of tax

$
9,337

$
1,733


$
(8,300
)   See accompanying notes to
    consolidated financial statements.
  F-7




---



##### Table of Contents



THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
 ($ in thousands)
  Year Ended December 31,2007


2006


2005Operating activities:Net income

$
95,620


$
72,563


$
23,564Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Depreciation & amortization


3,350



3,011



1,947Net deferred income tax (benefit)


(4,401
)


(4,590
)


(5,636
)Net realized capital (gains) losses


(2,006
)


1,026



(1,238
)Changes in assets and liabilities:Reinsurance receivable on paid and unpaid losses and loss
    adjustment expenses


129,314



50,019



(515,897
)Reserve for losses and loss adjustment expenses


34,844



(25,104
)


627,700Prepaid reinsurance premiums


(8,410
)


(35,354
)


(11,042
)Unearned premium


52,131



81,734



57,624Premiums in course of collection


2,470



5,712



10,939Commissions receivable


1,279



39



(541
)Deferred policy acquisition costs


(9,770
)


(9,142
)


(7,907
)Accrued investment income


(2,553
)


(2,618
)


(3,096
)Reinsurance balances payable


(34,342
)


1,342



48,841Federal income tax


6,847



228



(3,613
)Other


20,270



7,164



26,117Net cash provided by operating activities


284,643



146,030



247,762Investing activities:Fixed maturities, available-for-saleRedemptions and maturities


156,730



120,947



22,026Sales


218,044



157,645



323,158Purchases


(624,092
)


(539,401
)


(639,962
)Equity securities, available-for-saleSales


30,702



6,287



5,964Purchases


(61,930
)


(17,812
)


(5,559
)Change in payable for securities


(428
)


(604
)


(2,204
)Net change in short-term investments


7,560



(4,527
)


(73,022
)Purchase of property and equipment


(8,804
)


(4,703
)


(3,152
)Purchase of additional Syndicate 1221 capacity










(2,342
)Net cash (used in) investing activities


(282,218
)


(282,168
)


(375,093
)Financing activities:Net proceeds from stock offering










123,862Net proceeds from debt offering






123,538



Proceeds of stock issued from Employee Stock Purchase Plan


606



536



419Proceeds of stock issued from exercise of stock options


1,627



1,265



1,570Net cash provided by financing activities


2,233



125,339



125,851Effect of exchange rate changes on foreign currency cash


(6
)


38



(31
)Increase (decrease) in cash


4,652



(10,761
)


(1,511
)Cash at beginning of year


2,404



13,165



14,676Cash at end of year

$
7,056


$
2,404


$
13,165Supplemental disclosures of cash flow information:Federal, state and local income tax paid


40,046



31,533



17,867Interest paid


8,750



4,715



Issuance of stock to directors


181



140



123   See accompanying notes to
    consolidated financial statements.
  F-8




---



##### Table of Contents



THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  Note 1.
    Organization and Summary of Significant Accounting
    Policies
       Investments
  Accounting for Nonrefundable Fees and
    Costs Associated with Originating or Acquiring Loans and Initial
    Direct Costs of Leases
  F-9




---



##### Table of Contents



Syndicate
    1221
     Translation of
    Foreign Currencies
 Foreign Currency Translation accumulated other
    comprehensive income other income (expense)
  Premium
    Revenues
   Commission
    Income
   F-10




---



##### Table of Contents



Deferred Policy
    Acquisition Costs
   Reserves for
    Losses and Loss Adjustment Expenses
   Net Income per
    Share
   Reinsurance
    Ceded
     Depreciation and
    Amortization
   Goodwill and
    Other Intangible Assets
   F-11




---



##### Table of Contents



Business Combinations, Goodwill and Other Intangible
    Assets,
  Stock-Based
    Compensation
 Accounting for Stock-Based Compensation, Share Based Payment Accounting for Stock-Based
    Compensation Stock Option Plans, Stock Grants, Stock
    Appreciation Rights and Employee Stock Purchase Plan
  Federal Income
    Taxes
 Income
    Taxes
  Use of
    Estimates
   Consolidated
    Statements of Cash Flows
   Year Ended December 31, 2005As Previously





AsReported


Adjustments


Restated($ in thousands)Net cash provided by operating activities

$
238,826


$
8,936


$
247,762Net cash (used in) investing activities


(366,188
)


(8,905
)


(375,093
)Net cash provided by financing activities


125,851







125,851Effects of exchange rate changes on foreign currency cash










(31
)   Application of
    New Accounting Standards
 Accounting
    for Certain Hybrid Financial Instruments Accounting for Derivative Instruments
    and Hedging Activities Accounting for
    Transfers and Servicing of Financial Assets and Extinguishments
    of Liabilities
  F-12




---



##### Table of Contents



Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
 Fair Value
    Measurements FAS 157-b
 The Fair
    Value Option for Financial Assets and Financial Liabilities,
 Business
    Combinations Business Combinations
 Noncontrolling
    Interests in Consolidated Financial Statements
  Note 2.
    Earnings per Common Share
   Year Ended December 31, 2007Average

NetNet

Shares

IncomeIncome

Outstanding

Per ShareBasic EPS:Income available to common stockholders

$
95,620,201


16,812,451

$
5.69Effect of Dilutive Securities:Stock options and grants





192,398Diluted EPS:Income available to common stockholders

$
95,620,201


17,004,849

$
5.62    F-13




---



##### Table of Contents



Year Ended December 31, 2006Average

NetNet

Shares

IncomeIncome

Outstanding

Per ShareBasic EPS:Income available to common stockholders

$
72,563,000


16,721,964

$
4.34Effect of Dilutive Securities:Stock options and grants





133,646Diluted EPS:Income available to common stockholders

$
72,563,000


16,855,610

$
4.30   Year Ended December 31, 2005Average

NetNet

Shares

IncomeIncome

Outstanding

Per ShareBasic EPS:Income available to common stockholders

$
23,564,000


13,528,393

$
1.74Effect of Dilutive Securities:Stock options and grants





128,229Diluted EPS:Income available to common stockholders

$
23,564,000


13,656,622

$
1.73      Note 3.
    Segment Information
       F-14




---



##### Table of Contents



Year Ended December 31, 2007Insurance


LloydsCompanies


Operations


Corporate


Total($ in thousands)Gross written premium

$
774,346


$
296,361






$
1,070,707Net written premium


478,018



167,778







645,796Net earned premium


443,456



158,521







601,977Net losses and loss adjustment expenses


(256,652
)


(83,940
)






(340,592
)Commission expense


(52,490
)


(25,123
)






(77,613
)Other operating expenses


(81,053
)


(29,356
)






(110,409
)Commission income and other income (expense)


1,510



504







2,014Underwriting profit


54,771



20,606







75,377Investment income


58,261



10,524


$
1,877



70,662Net realized capital gains


1,973



33







2,006Interest expense










(8,863
)


(8,863
)Income (loss) before income tax expense (benefit)


115,005



31,163



(6,986
)


139,182Income tax expense (benefit)


35,061



10,946



(2,445
)


43,562Net income (loss)

$
79,944


$
20,217


$
(4,541
)

$
95,620Identifiable assets(1)

$
2,322,647


$
744,002


$
53,501


$
3,143,771Loss and loss expenses ratio


57.9
%


53.0
%






56.6
%Commission expense ratio


11.8
%


15.8
%






12.9
%Other operating expenses ratio(2)


17.9
%


18.2
%






18.0
%Combined ratio


87.6
%


87.0
%






87.5
%   (1)
    
    Includes inter-segment balances
    causing the row not to crossfoot.(2)
    
    Includes other operating
    expensesand commission income and other income
    (expense).  Year Ended December 31, 2007Insurance

LloydsCompanies

Operations

Total($ in thousands)Gross written premium:Marine

$
266,647

$
225,216

$
491,863Specialty


381,393





381,393Professional Liability


99,556


34,281


133,837Other


26,750


36,864


63,614Total

$
774,346

$
296,361

$
1,070,707Net written premium:Marine

$
137,724

$
131,430

$
269,154Specialty


263,433





263,433Professional Liability


59,117


23,349


82,466Other


17,744


12,999


30,743Total

$
478,018

$
167,778

$
645,796Net earned premium:Marine

$
133,452

$
132,443

$
265,895Specialty


243,915





243,915Professional Liability


55,149


17,659


72,808Other


10,940


8,419


19,359Total

$
443,456

$
158,521

$
601,977    F-15




---



##### Table of Contents



Year Ended December 31, 2006Insurance


LloydsCompanies


Operations


Corporate


Total($ in thousands)Gross written premium

$
672,846


$
297,944






$
970,790Net written premium


376,179



144,628







520,8070Net earned premium


329,723



138,600







468,323Net losses and loss adjustment expenses


(191,740
)


(78,447
)






(270,187
)Commission expense


(36,412
)


(21,375
)






(57,787
)Other operating expenses


(62,459
)


(23,296
)






(85,755
)Commission income and other income (expense)


3,552



(1,150
)






2,402Underwriting profit


42,664



14,332







56,996Investment income


47,723



7,694


$
1,478



56,895Net realized capital (losses)


(622
)


(404
)






(1,026
)Interest expense










(6,248
)


(6,248
)Income (loss) before income tax expense (benefit)


89,765



21,622



(4,770
)


106,617Income tax expense (benefit)


28,843



7,601



(2,390
)


34,054Net income (loss)

$
60,922


$
14,021


$
(2,380
)

$
72,563Identifiable assets(1)

$
2,105,293


$
806,948


$
47,781


$
2,956,686Loss and loss expenses ratio


58.2
%


56.6
%






57.7
%Commission expense ratio


11.0
%


15.4
%






12.3
%Other operating expenses ratio(2)


17.9
%


17.6
%






17.8
%Combined ratio


87.1
%


89.6
%






87.8
%   (1)
    
    Includes inter-segment balances
    causing the row not to crossfoot.(2)
    
    Includes other operating
    expensesand commission income and other income
    (expense).  Year Ended December 31, 2006Insurance

LloydsCompanies

Operations

Total($ in thousands)Gross written premium:Marine

$
266,351

$
245,134

$
511,485Specialty


311,376





311,376Professional Liability


92,760


21,759


114,519Other


2,359


31,051


33,410Total

$
672,846

$
297,944

$
970,790Net written premium:Marine

$
128,920

$
127,636

$
256,556Specialty


195,104





195,104Professional Liability


51,192


9,016


60,208Other


963


7,976


8,939Total

$
376,179

$
144,628

$
520,807Net earned premium:Marine

$
115,093

$
130,644

$
245,737Specialty


172,479





172,479Professional Liability


41,437


4,237


45,674Other


714


3,719


4,433Total

$
329,723

$
138,600

$
468,323    F-16




---



##### Table of Contents



Year Ended December 31, 2005Insurance


LloydsCompanies


Operations


Corporate


Total($ in thousands)Gross written premium(1)

$
529,681


$
248,383






$
779,579Net written premium


267,745



112,914







380,659Net earned premium


230,046



108,505







338,551Net losses and loss adjustment expenses


(155,293
)


(80,362
)






(235,655
)Commission expense


(22,984
)


(19,687
)






(42,671
)Other operating expenses


(52,353
)


(20,786
)






(73,139
)Commission income and other income (expense)


4,712



3,649







8,361Underwriting profit (loss)


4,128



(8,681
)






(4,553
)Investment income


31,764



5,061


$
244



37,069Net realized capital gains (losses)


1,705



(467
)






1,238Income before income tax expense (benefit)


37,597



(4,087
)


244



33,754Income tax expense (benefit)


11,535



(1,431
)


86



10,190Net income (loss)

$
26,062


$
(2,656
)

$
158


$
23,564Identifiable assets(1)

$
1,793,064


$
773,079


$
23,155


$
2,583,249Loss and loss expenses ratio


67.5
%


74.1
%






69.6
%Commission expense ratio


10.0
%


18.1
%






12.6
%Other operating expense ratio(2)


20.7
%


15.8
%






19.1
%Combined ratio


98.2
%


108.0
%






101.3
%   (1)
    
    Includes inter-segment balances
    causing the row not to crossfoot.(2)
    
    Includes other operating
    expensesand commission income and other income
    (expense).  Year Ended December 31, 2005Insurance


Lloyds

IntercompanyCompanies


Operations

Elimination


Total($ in thousands)Gross written premium:Marine

$
233,688


$
207,170

$



$
440,858Specialty


210,483










210,483Professional Liability


86,929



6,646






93,575Other


(1,419
)


34,567


1,515



34,663Total

$
529,681


$
248,383

$
1,515


$
779,579Net written premium:Marine

$
88,591


$
99,797

$



$
188,388Specialty


145,199










145,199Professional Liability


35,626



2,613






38,239Other


(1,671
)


10,504






8,833Total

$
267,745


$
112,914

$



$
380,659Net earned premium:Marine

$
83,499


$
102,632

$



$
186,131Specialty


117,208










117,208Professional Liability


30,118



1,240






31,358Other


(779
)


4,633






3,854Total

$
230,046


$
108,505

$



$
338,551      F-17




---



##### Table of Contents



Note 4.
    Investments
   Gross

GrossUnrealized

Unrealized


Cost orDecember 31, 2007

Fair Value

Gains

(Losses)


Amortized Cost($ in thousands)U.S. Government Treasury bonds, GNMAs and foreign government
    bonds

$
234,375

$
5,724

$
(337
)

$
228,988States, municipalities, and political subdivisions


515,883


7,050


(657
)


509,490Mortgage- and asset-backed securities:Non-guaranteed Government Agency bonds


29,818


342


(4
)


29,480Mortgage-backed securities


232,869


1,824


(479
)


231,524Collateralized mortgage obligations


134,899


524


(823
)


135,198Commercial mortgage-backed securities


113,488


544


(1,031
)


113,975Asset-backed securities


64,352


533


(79
)


63,898Subtotal


575,426


3,767


(2,416
)


574,075Corporate bonds


196,636


2,504


(1,804
)


195,936Total fixed maturities


1,522,320


19,045


(5,214
)


1,508,489Equity securitiescommon stocks


67,240


6,452


(4,704
)


65,492Cash


7,056









7,056Short-term investments


170,685









170,685Total

$
1,767,301

$
25,497

$
(9,918
)

$
1,751,722   Gross

GrossUnrealized

Unrealized


Cost orDecember 31, 2006

Fair Value

Gains

(Losses)


Amortized Cost($ in thousands)U.S. Government Treasury bonds, GNMAs and foreign government
    bonds

$
194,210

$
969

$
(1,999
)

$
195,240States, municipalities, and political subdivisions


361,859


2,719


(2,345
)


361,485Mortgage- and asset-backed securities:Non-guaranteed Government Agency bonds


11,998


3


(88
)


12,083Mortgage-backed securities


202,371


176


(2,518
)


204,713Collateralized mortgage obligations


124,508


220


(358
)


124,646Commercial mortgage-backed securities


94,117


330


(1,142
)


94,929Asset-backed securities


68,566


213


(469
)


68,822Subtotal


501,560


942


(4,575
)


505,193Corporate bonds


201,088


1,672


(1,950
)


201,366Total fixed maturities


1,258,717


6,302


(10,869
)


1,263,284Equity securitiescommon stocks


37,828


6,297


(348
)


31,879Cash


2,404









2,404Short-term investments


176,961









176,961Total

$
1,475,910

$
12,599

$
(11,217
)

$
1,474,528       F-18




---



##### Table of Contents



are made within the context of
    overall risk monitoring, new information, market conditions and
    assessing value relative to other comparable securities.
    Management of the Companys investment portfolio is
    outsourced to third party investment managers. While these
    investment managers may, at a given point in time, believe that
    the preferred course of action is to hold securities with
    unrealized losses that are considered temporary until such
    losses are recovered, the dynamic nature of the portfolio
    management may result in a subsequent decision to sell the
    security and realize the loss, based upon a change in market and
    other factors described above. The Company believes that
    subsequent decisions to sell such securities are consistent with
    the classification of the Companys portfolio as available
    for sale.


December 31, 2007

December 31, 2006Fair

Gross

Fair

GrossValue

Unrealized Loss

Value

Unrealized Loss($ in thousands)Fixed Maturities:US Government Treasury bonds, GNMAs and foreign government bonds0-6 Months

$
4,119

$
32

$
34,085

$
5867-12 Months








20,806


86> 12 Months


19,587


305


69,424


1,327Subtotal


23,706


337


124,315


1,999States, municipalities and political subdivisions0-6 Months


21,853


67


57,747


3167-12 Months


6,045


115


6,661


80> 12 Months


69,671


475


118,917


1,949Subtotal


97,569


657


183,325


2,345Mortgage- and asset-backed securities (excluding GNMAs)0-6 Months


61,388


515


174,270


9217-12 Months


48,496


423


10,444


65> 12 Months


121,798


1,478


184,515


3,589Subtotal


231,682


2,416


369,229


4,575Corporate bonds0-6 Months


20,722


255


27,719


1857-12 Months


25,520


974


15,503


224> 12 Months


38,865


575


66,014


1,541Subtotal


85,107


1,804


109,236


1,950Total Fixed Maturities

$
438,064

$
5,214

$
786,105

$
10,869Equity securitiescommon stocks0-6 Months

$
26,257

$
3,494

$
3,265

$
1587-12 Months


4,153


1,209


800


72> 12 Months


53


1


782


118Total Equity Securities

$
30,463

$
4,704

$
4,847

$
348      F-19




---



##### Table of Contents



Fair

AmortizedPeriod from December 31, 2007 to Maturity

Value

Cost($ in thousands)Due in one year or less

$
42,415

$
42,442Due after one year through five years


322,763


319,587Due after five years through ten years


307,550


302,020Due after ten years


274,166


270,365Mortgage- and asset-backed (including GNMAs)


575,426


574,075Total

$
1,522,320

$
1,508,489       Year Ended December 31,2007


2006


2005($ in thousands)Fixed maturities

$
64,435


$
51,102


$
35,551Equity securities


1,767



1,168



799Short-term investments


7,363



7,058



2,30773,565



59,328



38,657Investment expenses


(2,903
)


(2,433
)


(1,588
)Net investment income

$
70,662


$
56,895


$
37,069      Year Ended December 31,2007


2006


2005($ in thousands)Fixed maturities:Gains

$
1,320


$
743


$
1,932(Losses)


(1,749
)


(2,385
)


(1,680
)(429
)


(1,642
)


252Equity securities:Gains


3,626



714



1,149(Losses)


(1,191
)


(98
)


(163
)2,435



616



986Net realized capital gains (losses)

$
2,006


$
(1,026
)

$
1,238     non-U.S.
   Note 5.
    Reserves for Losses and Loss Adjustment Expenses
   F-20




---



##### Table of Contents



to cover the probable ultimate cost
    of settling all losses incurred and unpaid, including those
    incurred but not reported. The determination of reserves for
    losses and loss adjustment expenses (LAE) for
    insurance companies such as Navigators Insurance Company and
    Navigators Specialty Insurance Company, and Lloyds
    corporate members such as Navigators Corporate Underwriters Ltd.
    and Millennium Underwriting Ltd. is dependent upon the receipt
    of information from the agents and brokers which produce the
    insurance business for the Company. Generally, there is a lag
    between the time premiums are written and related losses and
    loss adjustment expenses are incurred, and the time such events
    are reported to the agents and brokers and, subsequently, to
    Navigators Insurance Company, Navigators Specialty Insurance
    Company, Navigators Corporate Underwriters Ltd. and Millennium
    Underwriting Ltd.
 case-by-case


Year Ended December 31,2007


2006


2005($ in thousands)Net reserves for losses and LAE at beginning of year

$
696,116


$
578,976


$
463,788Provision for losses and LAE for claims occurring in the current
    year


387,601



287,401



239,436(Decrease) in estimated losses and LAE for claims occurring in
    prior years


(47,009
)


(17,214
)


(3,781
)Incurred losses and LAE


340,592



270,187



235,655Losses and LAE paid for claims occurring during:Current year


(46,467
)


(19,710
)


(23,486
)Prior years


(142,938
)


(133,337
)


(96,981
)Losses and LAE payments


(189,405
)


(153,047
)


(120,467
)Net reserves for losses and LAE at end of year


847,303



696,116



578,976Reinsurance receivables on unpaid losses and LAE


801,461



911,439



979,015Gross reserves for losses and LAE at end of year

$
1,648,764


$
1,607,555


$
1,557,991   F-21




---



##### Table of Contents



Year Ended December 31,2007


2006


2005($ in thousands)Insurance CompaniesMarine

$
(10,695
)

$
(4,800
)

$
1,912Specialty


(12,091
)


(6,060
)


875Professional Liability


(10,365
)


(1,223
)


(3,045
)Other


(645
)


(649
)


(2,324
)Subtotal Insurance Companies


(33,796
)


(12,732
)


(2,582
)Lloyds Operations


(13,213
)


(4,482
)


(1,199
)Total

$
(47,009
)

$
(17,214
)

$
(3,781
)     Year Ended December 31,2007


2006

2005($ in thousands)Gross of ReinsuranceBeginning gross reserves

$
37,171


$
56,838

$
78,421Incurred loss & LAE


(781
)


246


(17,409
)Calendar year payments


13,197



19,913


4,174Ending gross reserves

$
23,193


$
37,171

$
56,838Gross case loss reserves

$
16,014


$
29,291

$
48,958Gross IBNR loss reserves


7,179



7,880


7,880Ending gross reserves

$
23,193


$
37,171

$
56,838Net of ReinsuranceBeginning net reserves

$
21,381


$
30,372

$
31,394Incurred loss & LAE


1,779



229


529Calendar year payments


6,443



9,220


1,551Ending net reserves

$
16,717


$
21,381

$
30,372Net case loss reserves

$
9,715


$
13,678

$
22,669Net IBNR loss reserves


7,002



7,703


7,703Ending net reserves

$
16,717


$
21,381

$
30,372         F-22




---



##### Table of Contents



Note 6.
    Reinsurance
      Rating

Recoverable

PercentA.M. Best Rating(1)

Description

Amounts

to Total($ millions)A++, A+


Superior

$
637.4


59
%A, A−


Excellent


408.3


38
%B++, B+


Very good


3.0


0
%(2)NR


Not rated


36.6


3
%(2)Total




$
1,085.3


100
%   (1)
    
    Equivalent S&P rating used for
    certain companies when an A.M. Best rating was unavailable.(2)
    
    The Company holds offsetting
    collateral of approximately 33% for B++ and B+ companies and 92%
    for not rated companies which includes letters of credit, ceded
    balances payable and other balances held by our Insurance
    Companies and our Lloyds Operations.  F-23




---



##### Table of Contents



Reinsurance RecoverablesUnearned

Unpaid/Paid



Collateral(1)

Rating &Reinsurer

Premium

Losses

Total

Held

Rating Agency($ in millions)Swiss Reinsurance America Corporation

$
20.5

$
95.6

$
116.1

$
13.6


A+



AMB(2
)Folksamerica Reinsurance Company


21.0


88.7


109.7


45.7


A−



AMBGeneral Reinsurance Corporation


7.1


89.7


96.8





A++



AMBEverest Reinsurance Company


14.6


40.4


55.0


7.5


A+



AMBNational Indemnity Company


11.6


37.8


49.4


11.3


A++



AMBTransatlantic Reinsurance Company


15.6


33.3


48.9


9.5


A+



AMBMunich Reinsurance America Inc.


9.8


32.1


41.9


11.5


A+



AMBMunchener Ruckversicherungs-Gesellschaft


6.2


33.6


39.8


8.6


A+



AMBSwiss Reinsurance Company (UK) Ltd.


5.7


30.7


36.4


8.1


A+



AMBPlatinum Underwriters Re


5.8


27.7


33.5


3.5


A



AMBArch Reinsurance Company


3.8


25.3


29.1


1.0


A



AMBPartner Reinsurance Company of the U.S.


6.1


21.9


28.0


3.9


A+



AMBScor Holding (Switzerland) AG


5.8


20.1


25.9


4.5


A−



AMBFederal Insurance Co.


5.7


15.6


21.3


5.6


A++



AMBBerkley Insurance Company


11.4


9.5


20.9


5.6


A+



AMBArch Reinsurance Limited


5.5


12.0


17.5


17.0


A



AMBAllianz Global Corporate & Specialty AG





16.1


16.1


2.9


A+



AMBHannover Ruckversicherung


1.4


13.2


14.6


1.3


A



AMBAce Property and Casualty Insurance Company


2.3


11.9


14.2


0.5


A+



AMBNational Liability & Fire Insurance Company


0.1


12.3


12.4





A++



AMBTop 20 Total


160.0


667.5


827.5


161.6All Other


29.0


228.8


257.8


91.5Total

$
189.0

$
896.3

$
1,085.3

$
253.1   (1)
    
    Collateral includes letters of
    credit, ceded balances payable and other balances held by our
    Insurance Companies and our Lloyds Operations.(2)
    
    A.M. Best      F-24




---



##### Table of Contents



Year Ended December 31,2007


2006


2005($ in thousands)Direct

$
989,652


$
904,863


$
701,094Assumed


81,055



65,927



78,485Ceded


(424,911
)


(449,983
)


(398,920
)Net

$
645,796


$
520,807


$
380,659     Year Ended December 31,2007


2006


2005($ in thousands)Direct

$
940,447


$
811,794


$
653,064Assumed


78,164



65,660



76,795Ceded


(416,634
)


(409,131
)


(391,308
)Net

$
601,977


$
468,323


$
338,551     Year Ended December 31,2007


2006


2005($ in thousands)Direct

$
532,445


$
475,148


$
745,416Assumed


18,314



22,854



140,321Ceded


(210,167
)


(227,815
)


(650,082
)Net

$
340,592


$
270,187


$
235,655      Note 7.
    Income Taxes
 non-U.S. non-U.S.
 non-U.S. non-U.S. non-U.S.
  F-25




---



##### Table of Contents



Year Ended December 31,2007


2006


2005($ in thousands)Current income tax expense:Federal and foreign

$
47,963


$
38,644


$
15,841State and local










(15
)Subtotal


47,963



38,644



15,826Deferred income tax expense:Federal and foreign


(4,401
)


(4,590
)


(5,672
)State and local










36Subtotal


(4,401
)


(4,590
)


(5,636
)Total income tax expense

$
43,562


$
34,054


$
10,190     Year Ended December 31,2007


2006


2005($ in thousands)Computed expected tax expense

$
48,714



35.0
%

$
37,316



35.0
%

$
11,814



35.0
%Tax-exempt interest


(4,736
)


−3.4
%


(3,331
)


−3.1
%


(1,899
)


−5.6
%Dividends received deduction


(345
)


−0.2
%


(243
)


−0.2
%


(166
)


−0.5
%State and local income taxes, net of Federal income tax


64



0.0
%






0.0
%


14



0.0
%Change in the state and local tax net operating loss carryforward


(358
)


−0.3
%


(981
)


−1.0
%


(516
)


−3.6
%Change in the valuation allowance


358



0.3
%


981



1.0
%


516



3.6
%Other


(135
)


−0.1
%


312



0.2
%


427



1.3
%Actual tax expense and rate

$
43,562



31.3
%

$
34,054



31.9
%

$
10,190



30.2
%     December 31,2007


2006($ in thousands)Deferred tax assets:Loss reserve discount

$
28,857


$
24,847Unearned premium


14,467



12,048Compensation related


5,190



2,313State and local net deferred tax assets


6,348



5,990Other


922



737Total gross deferred tax assets


55,784



45,935Less: Valuation allowance


(6,348
)


(5,990
)Total deferred tax assets


49,436



39,945Deferred tax liabilities:Deferred acquisition costs


(10,794
)


(8,602
)Net unrealized gains on securities


(5,394
)


(534
)Net deferred state and local income tax


(254
)


(254
)Other


(3,745
)


(133
)Total deferred tax liabilities


(20,187
)


(9,523
)Net deferred tax asset

$
29,249


$
30,422     F-26




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##### Table of Contents



Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
  Note 8.
    Credit Facility
     Note 9.
    Senior Notes
     Note 10.
    Fiduciary Funds
   F-27




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##### Table of Contents



Note 11.
    Commitments and Contingencies
   Year Ended December 31,

($ in thousands)2008

$
5,8592009


6,6002010


6,2142011


5,7982012


5,751Subsequent to 2012


25,061Total

$
55,283   
 
   Note 12.
    Share Capital
 a.
    Authorized


Year Ended December 31,2007

2006

2005(in thousands)Balance, beginning of year


16,736


16,617


12,657Public offering








3,795Vested stock grants


33


32


37Employee stock purchase plan


15


15


16Stock options exercised


89


72


112Balance, end of year


16,873


16,736


16,617       Note 13.
    Dividends from Subsidiaries and Statutory Financial
    Information
      F-28




---



##### Table of Contents



included in statutory surplus,
    while under GAAP deferred taxes are provided to reflect all
    temporary differences between the carrying values and tax basis
    of assets and liabilities; (4) unearned premiums and loss
    reserves are reflected net of ceded amounts while under GAAP the
    unearned premiums and loss reserves are reflected gross of ceded
    amounts; (5) agents balances over ninety days due are
    excluded from the balance sheet, and uncollateralized amounts
    due from unauthorized reinsurers are deducted from surplus,
    while under GAAP they are restored to the balance sheet, subject
    to the usual tests regarding recoverability.
   Note 14.
    Stock Option Plans, Stock Grants, Stock Appreciation Rights and
    Employee Stock Purchase Plan
 Accounting for
    Stock-Based Compensation Accounting for Stock-Based Compensation-Transition and
    Disclosure


Year Ended December 31,2007


2006


2005Stock grants outstanding at beginning of year


250,149



99,708



94,460Granted


203,725



208,623



58,458Vested


(40,827
)


(40,574
)


(50,874
)Forfeited


(21,181
)


(17,608
)


(2,336
)Balance at end of year


391,866



250,149



99,708     2007

2006

2005Average




Average




AverageNo. of


Exercise

No. of


Exercise

No. of


ExerciseShares


Prices

Shares


Prices

Shares


PricesOptions outstanding at beginning of year


475,250


$
22.45


554,000


$
21.85


641,875


$
19.87Granted
















41,500


$
33.29Exercised


(88,525
)

$
18.38


(71,750
)

$
17.30


(112,375
)

$
13.97Expired or forfeited


(2,375
)

$
29.11


(7,000
)

$
28.25


(17,000
)

$
27.15Options outstanding at end of year


384,350


$
23.34


475,250


$
22.45


554,000


$
21.85Number of options exercisable


329,600


$
22.12


355,000


$
20.01


342,750


$
17.34   F-29




---



##### Table of Contents



Year Ended December 31,2007

2006

2005Dividend yield


N/A


N/A


0.0
%Risk free interest rate


N/A


N/A


4.0
%Expected volatility


N/A


N/A


31.1
%Expected life


N/A


N/A


6 yearsWeighted average fair value


N/A


N/A

$
12.76       Outstanding

Average Remaining

Average

Exercisable

AveragePrice Range

Options

Contract Life

Exercise Price

Options

Exercise Price$10 to $15


69,375


1.9

$
11.60


69,375

$
11.60$16 to $20


80,850


4.3

$
17.06


80,850

$
17.06$21 to $30


192,625


5.9

$
28.02


158,625

$
27.84$31 to $37


41,500


7.2

$
33.29


20,750

$
33.29       Year Ended December 31,2007

2006

2005Average




Average




AverageExercise




Exercise




ExerciseSARs


Prices

SARs


Prices

SARs


PricesSARs outstanding at beginning of year


118,750


$
13.41


137,750


$
13.51


179,750


$
14.19Granted
















Exercised


(53,500
)

$
12.98


(19,000
)

$
14.16


(38,875
)

$
16.01Expired or forfeited


(1,000
)

$
22.50









(3,125
)

$
21.35SARs outstanding at end of year


64,250


$
13.63


118,750


$
13.41


137,750


$
13.51Number of SARs exercisable


64,250


$
13.63


118,750


$
13.41


134,875


$
13.32     Note 15.
    Retirement Plans
   F-30




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##### Table of Contents



Note 16.
    Quarterly Financial Data (Unaudited)
   March 31,


June 30,


Sept. 30,


Dec. 31,2007


2007


2007


2007($ in thousands, except net income per share)Gross written premium

$
300,861


$
276,546


$
245,961


$
247,336Net written premium


173,019



161,350



159,102



152,325Revenues:Net earned premium


139,046



145,617



156,038



161,276Commission income


408



486



117



725Net investment income


16,216



17,330



17,930



19,186Net realized capital (losses)


201



840



(66
)


1,031Other income (expense)


(71
)


(253
)


298



304Total revenues


155,800



164,020



174,317



182,522Operating expenses:Net losses and loss adjustment expenses incurred


81,192



79,739



88,019



91,642Commission expense


17,099



17,650



19,676



23,188Other operating expenses


26,289



28,608



27,902



27,610Interest expense


2,215



2,215



2,216



2,217Total operating expenses


126,795



128,212



137,813



144,657Income before income tax expense


29,005



35,808



36,504



37,865Income tax expense


9,333



11,433



11,471



11,325Net income

$
19,672


$
24,375


$
25,033


$
26,540Comprehensive income

$
21,273


$
12,107


$
37,518


$
34,968Combined ratio


89.4
%


86.4
%


86.6
%


87.7
%Net income per common share:Basic

$
1.17


$
1.45


$
1.49


$
1.57Diluted

$
1.17


$
1.44


$
1.47


$
1.55      F-31




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##### Table of Contents



March 31,


June 30,


Sept. 30,


Dec. 31,2006


2006


2006


2006($ in thousands, except net income per share)Gross written premium

$
263,784


$
252,365


$
221,667


$
232,974Net written premium


143,426



129,248



119,037



129,096Revenues:Net earned premium


103,722



114,541



115,696



134,364Commission income


1,286



540



639



610Net investment income


12,550



14,003



14,691



15,651Net realized capital (losses)


(424
)


(192
)


(151
)


(259
)Other income (expense)


186



44



(884
)


(19
)Total revenues


117,320



128,936



129,991



150,347Operating expenses:Net losses and loss adjustment expenses incurred


62,117



66,627



64,456



76,987Commission expense


13,705



13,624



13,769



16,689Interest expense


18,408



19,927



22,683



24,737Other operating expenses






1,820



2,214



2,214Total operating expenses


94,230



101,998



103,122



120,627Income before income tax expense


23,090



26,938



26,869



29,720Income tax expense


7,565



8,840



8,536



9,113Net income

$
15,525


$
18,098


$
18,333


$
20,607Comprehensive income

$
6,437


$
11,845


$
35,834


$
22,708Combined ratio


89.4
%


87.0
%


87.4
%


87.7
%Net income per common share:Basic

$
0.93


$
1.09


$
1.10


$
1.23Diluted

$
0.93


$
1.08


$
1.09


$
1.22      F-32




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##### Table of Contents



SCHEDULE I
  THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    SUMMARY OF CONSOLIDATED INVESTMENTSOTHER THAN
    INVESTMENTS
    IN RELATED PARTIES
 December 31, 2007
  Gross

GrossUnrealized

Unrealized


Cost orDecember 31, 2007

Fair Value

Gains

(Losses)


Amortized Cost($ in thousands)U.S. Government Treasury bonds, GNMAs and foreign government
    bonds

$
234,375

$
5,724

$
(337
)

$
228,988States, municipalities, and political subdivisions


515,883


7,050


(657
)


509,490Mortgage- and asset-backed securities:Non-guaranteed Government Agency bonds


29,818


342


(4
)


29,480Mortgage-backed securities


232,869


1,824


(479
)


231,524Collateralized mortgage obligations


134,899


524


(823
)


135,198Commercial mortgage-backed securities


113,488


544


(1,031
)


113,975Asset-backed securities


64,352


533


(79
)


63,898Subtotal


575,426


3,767


(2,416
)


574,075Corporate bonds


196,636


2,504


(1,804
)


195,936Total fixed maturities


1,522,320


19,045


(5,214
)


1,508,489Equity securitiescommon stocks


67,240


6,452


(4,704
)


65,492Cash


7,056









7,056Short-term investments


170,685









170,685Total

$
1,767,301

$
25,497

$
(9,918
)

$
1,751,722   S-1




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##### Table of Contents



SCHEDULE II
  THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
    THE NAVIGATORS GROUP, INC.
 BALANCE SHEETS
 (Parent Company)
 ($ in thousands, except share
    data)
  December 31,ASSETS

2007


2006Cash and investments

$
44,146


$
32,308Investments in subsidiaries


735,351



634,299Goodwill and other intangible assets


2,534



2,534Other assets


6,821



12,939Total assets

$
788,852


$
682,080LIABILITIES7% Senior Notes due May 1, 2016

$
123,673


$
123,560Accounts payable and other liabilities


1,615



1,590Accrued interest payable


1,458



1,458Deferred compensation payable






4,129Total liabilities


126,746



130,737STOCKHOLDERS EQUITYPreferred stock, $.10 par value, 1,000,000 shares
    authorized, none issued






Common stock, $.10 par value, 50,000,000 shares authorized;
    issued and outstanding: 16,873,094 for 2007 and 16,735,898 for
    2006


1,687



1,674Additional paid-in capital


291,616



286,732Retained earnings


355,084



259,464Accumulated other comprehensive income:Net unrealized gains on securities available-for-sale, net of tax


10,186



849Foreign currency translation adjustment, net of tax


3,533



2,624Total stockholders equity


662,106



551,343Total liabilities and stockholders equity

$
788,852


$
682,080   S-2




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##### Table of Contents



SCHEDULE II
  THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)
    THE NAVIGATORS GROUP, INC.
 STATEMENTS OF INCOME
    (Parent Company)
 ($ in thousands)
  Year Ended December 31,2007


2006


2005Revenues:Net investment income

$
1,877


$
1,478


$
244Dividends received from wholly-owned subsidiaries


8,000







3,000Total revenues


9,877



1,478



3,244Expenses:Interest expense


8,863



6,248



Other (income) expense


(1,996
)


2,072



4,208Total expenses


6,867



8,320



4,208Income (loss) before income tax (benefit)


3,010



(6,842
)


(964
)Income tax (benefit)


(1,804
)


(2,390
)


(1,387
)Income (loss) before equity in undistributed net income of
    wholly owned subsidiaries


4,814



(4,452
)


423Equity in undistributed net income of wholly owned subsidiaries


90,806



77,015



23,141Net Income

$
95,620


$
72,563


$
23,564   S-3




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##### Table of Contents



SCHEDULE II
  THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)
    THE NAVIGATORS GROUP, INC.
 STATEMENTS OF CASH FLOWS
    (Parent Company)
 ($ in thousands)
  Year Ended December 31,2007


2006


2005Operating activities:Net income

$
95,620


$
72,563


$
23,564Adjustments to reconcile net income to net cash (used in)
    provided by operations:Equity in undistributed net (income) of wholly- owned
    subsidiaries


(98,806
)


(77,015
)


(26,141
)Dividends received from subsidiaries


8,000







3,000Other


4,792



(5,505
)


6,425Net cash (used in) provided by operating activities


9,606



(9,957
)


6,848Investing activities:Fixed maturities, available-for-sale Purchases


10,500



(20,137
)


Investments in wholly-owned subsidiaries






(100,000
)


(120,000
)Net (increase) decrease in short-term investments


(20,497
)


5,792



(12,663
)Net cash (used in) investing activities


(9,997
)


(114,345
)


(132,663
)Financing activities:Net proceeds from stock offering










123,862Net proceeds from debt offering






123,538



Proceeds of stock issued from employee stock purchase plan


606



536



419Proceeds of stock issued from exercise of stock options


1,627



1,265



1,570Net cash provided by financing activities


2,233



125,339



125,851Increase (decrease) in cash


1,842



1,037



36Cash at beginning of year


1,261



224



188Cash at end of year

$
3,103


$
1,261


$
224   S-4




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##### Table of Contents



SCHEDULE III
  THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
    SUPPLEMENTARY INSURANCE INFORMATION
 ($ in thousands)
  Reserve









Losses

AmortizationDeferred

for Losses



Other Policy





and Loss

of DeferredPolicy

and Loss



Claims and

Net

Net

Adjustment

Policy

Other

NetAcquisition

Adjustment

Unearned

Benefits

Earned

Investment

Expenses

Acquisition

Operating

WrittenCosts

Expenses

Premiums

Payable

Premium

Income(1)

Incurred

Costs(2)

Expenses(1)

PremiumYear ended December 31, 2007Insurance Companies


$30,840


$1,201,595


$336,261


$


$443,456


$58,261


$256,652


$52,490


$81,053


$478,018Lloyds Operations


21,055


447,169


133,220





158,521


10,524


83,940


25,123


29,356


167,778$51,895


$1,648,764


$469,481


$


$601,977


$68,785


$340,592


$77,613


$110,409


$645,796Year ended December 31, 2006Insurance Companies


$24,578


$1,079,379


$292,803


$


$329,723


$47,723


$191,740


$36,412


$62,459


$376,179Lloyds Operations


17,122


528,176


122,293





138,600


7,694


78,447


21,375


23,296


144,628$41,700


$1,607,555


$415,096


$


$468,323


$55,417


$270,187


$57,787


$85,755


$520,807Year ended December 31, 2005Insurance Companies


$14,361


$994,079


$223,592


$


$230,046


$31,764


$155,293


$22,984


$52,353


$267,745Lloyds Operations


15,336


563,912


92,924





108,505


5,061


80,362


19,687


20,786


112,914$29,697


$1,557,991


$316,516


$


$338,551


$36,825


$235,655


$42,671


$73,139


$380,659   (1)
    
    Net investment income and other
    operating expenses reflect only such amounts attributable to the
    Companys insurance operations.(2)
    
    Amortization of deferred policy
    acquisition costs reflects only such amounts attributable to the
    Companys insurance operations. A portion of these costs is
    eliminated in consolidation.  S-5




---



##### Table of Contents



SCHEDULE IV
  THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES REINSURANCE
 Written Premium
 ($ in thousands)
  PercentageCeded to

Assumed




of AmountDirect

Other

from Other


Net

AssumedAmount

Companies

Companies


Amount

to NetYear ended December 31, 2007Property-Casualty

$
989,652

$
424,911

$
81,055


$
645,796


13
%Year ended December 31, 2006Property-Casualty

$
904,863

$
449,983

$
65,927


$
520,807


13
%Year ended December 31, 2005Property-Casualty

$
701,094

$
398,920

$
78,485


$
380,659


21
%   S-6




---



##### Table of Contents



SCHEDULE V
  THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
 VALUATION AND QUALIFYING ACCOUNTS
 ($ in thousands)
  ChargedBalance at

(Credited) to

Charged to



Balance atJanuary 1,

Costs and

Other

Deductions

December 31,Description

2007

Expenses

Accounts

(Describe)

2007Allowance for uncollectible reinsurance

$
8,473

$
921

$


$


$
9,394Valuation allowance in deferred taxes

$
5,990

$
358

$


$


$
6,348   S-7




---



##### Table of Contents



SCHEDULE VI
  THE NAVIGATORS
    GROUP, INC. AND SUBSIDIARIES
 SUPPLEMENTARY INFORMATION
    CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS
 ($ in thousands)
  Reserve











Losses and Loss Adjustment


AmortizationDeferred


for Losses











Expenses Incurred Related to


of DeferredAffiliation

Policy


and Loss


Discount,




Net

Net




Policy

Other


Netwith

Acquisition


Adjustment


if any,

Unearned


Earned

Investment

Current

Prior


Acquisition

Operating


WrittenRegistrant

Costs


Expenses


Deducted

Premium


Premium

Income(1)

Year

Years


Costs(2)

Expenses(1)


PremiumConsolidated SubsidiariesYear ended December 31, 2007

$
51,895


$
1,648,764


$


$
469,481


$
601,977

$
68,785

$
387,601

$
(47,009
)

$
77,613

$
110,409


$
645,796Year ended December 31, 2006

$
41,700


$
1,607,555


$


$
415,096


$
468,323

$
55,417

$
287,401

$
(17,214
)

$
57,787

$
85,755


$
520,807Year ended December 31, 2005

$
29,697


$
1,557,991


$


$
316,516


$
338,551

$
36,825

$
239,436

$
(3,781
)

$
42,671

$
73,139


$
380,659   (1)
    
    Net investment income and other
    operating expenses reflect only such amounts attributable to the
    Companys Insurance Operations.(2)
    
    Amortization of deferred policy
    acquisition costs reflects only such amounts attributable to the
    Companys Insurance Operations. A portion of these costs is
    eliminated in consolidation.  S-8




---



##### Table of Contents



INDEX TO EXHIBITS
  Previously Filed andIncorporated HereinExhibit No.

Description of Exhibit

by Reference to: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


By-laws, as amended

Form S-1 (File No. 33-5667)3-4


Certificate of Amendment to the Restated Certificate of
    Incorporation

Form 10-Q for June 30, 20064-1


Specimen of Common Stock certificate, par value $0.10 per share

Form S-8 filed June 20, 2003 (File No. 333-106317)10-1


Management Agreement between Navigators Insurance Company and
    Navigators Management Company, Inc. (formerly Somerset Marine,
    Inc.)

Form S-1 (File No. 33-5667)10-2


Agreement between the Company and Navigators Management Company,
    Inc. (formerly Somerset Marine, Inc.)

Form S-1 (File No. 33-5667)10-3*


Stock Option Plan

Form S-1 (File No. 33-5667)10-4*


Non-Qualified Stock Option Plan

Form S-4 (File No. 33-75918)10-5


Agreement with Bradley D. Wiley dated June 3, 1997

Form 10-K for December 31, 199710-6


Employment Agreement with Salvatore A. Margarella dated
    March 1, 1999

Form 10-K for December 31, 199810-7


Employment Agreement with Stanley A. Galanski effective
    March 26, 2001

Form 10-Q for March 31, 200110-8


Employment Agreement with R. Scott Eisdorfer dated
    September 1, 1999

Form 10-K for December 31, 200210-9*


2002 Stock Incentive Plan

Proxy Statement for May 30, 200210-10*


Employee Stock Purchase Plan

Proxy Statement for May 29, 200310-11*


Executive Performance Incentive Plan

Proxy Statement for May 29, 200310-12


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.
    333-108424)10-13


Agreement with Paul J. Malvasio dated October 9, 2003

Form 10-K for December 31, 200310-14


Form of Stock Grant Award Certificate and Restricted Stock
    Agreement for the 2002 Stock Incentive Plan (approved at Annual
    Meeting of Shareholders held May 30, 2002)

Form 10-Q for September 30, 200410-15


Form of Option Award Certificate for the 2002 Stock Incentive
    Plan (approved at Annual Meeting of Shareholders held
    May 30, 2002)

Form 10-Q for September 30, 200410-16


Agreement with Jane E. Keller

Form 10-Q for September 30, 200410-17


Common Stock Grant Award to Stanley A. Galanski under the 2002
    Stock Incentive Plan

Form 8-K filed December 14, 200410-18


Commutation Agreement between Navigators Insurance Company and
    Somerset Insurance Limited

Form 8-K filed January 18, 200510-19


Second Amended and Restated Credit Agreement among the Company
    and the Lenders dated January 31, 2005

Form 8-K filed February 4, 200510-20*


2005 Stock Incentive Plan

Proxy Statement for May 20, 200510-21


Agreement with Elliot S. Orol

Form 10-Q for June 30, 200510-22


Agreement with John F. Kirby

Form 8-K filed July 7, 200610-23


Third Amended and Restated Credit Agreement among the Company
    and the Lenders dated February 2, 2007

Form 8-K filed February 7, 200711-1


Statement re Computation of Per Share Earnings

**21-1


Subsidiaries of Registrant

**23-1


Consent of Independent Registered Public Accounting Firm

**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)

**




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##### Table of Contents



Previously Filed andIncorporated HereinExhibit No.

Description of Exhibit

by Reference to: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)

***


Compensatory plan.**


Included herein