<PAGE>   1
                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


For the Quarterly Period Ended              September 30, 1999

Commission file number                 0-15886

                           The Navigators Group, Inc.
             (Exact name of registrant as specified in its charter)

          Delaware                                         13-3138397
(State or other jurisdiction of                          (IRS Employer
incorporation or organization)                        Identification No.)


123 William Street, New York, New York                       10038
(Address of principal executive offices)                  (Zip Code)

                                 (212) 349-1600
              (Registrant's telephone number, including area code)


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

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes /X/ No / /

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

On November 11, 1999, there were 8,406,970 shares of common stock, $0.10 par
value, issued and outstanding.


                                       1
<PAGE>   2
                   THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

                                      INDEX

                                                                      Page No.



Part I.  FINANCIAL INFORMATION:

       Consolidated Balance Sheets
                September 30, 1999 and December 31, 1998 ...........     3

       Consolidated Statements of Income
                Three Months Ended September 30, 1999 and 1998 .....     4
                Nine Months Ended September 30, 1999 and 1998 ......     5

       Consolidated Statements of Cash Flows
                Nine Months Ended September 30, 1999 and 1998 ......     6

       Notes to Interim Consolidated Financial Statements ..........     7

       Management's Discussion and Analysis of Financial
                Condition and Results of Operations ................    11

Part II.  OTHER INFORMATION ........................................    17


                                       2
<PAGE>   3
                   THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)


<TABLE>
<CAPTION>
                                                                                                   September 30,    December 31,
                                                                                                       1999             1998
                                                                                                   -------------    ------------
<S>                                                                                                <C>              <C>
                                                                                                    (Unaudited)
                                             ASSETS
Investments and cash:
  Fixed maturities, available-for-sale, at fair value
    (amortized cost: 1999, $224,458; 1998, $232,021) ..........................................      $ 223,176       $ 240,233
  Equity securities, available-for-sale, at fair value (cost: 1999, $11,176;
    1998, $6,506) .............................................................................         11,021           7,400
  Short-term investments, at cost which approximates fair value ...............................         15,265           5,647
  Cash ........................................................................................          3,187           2,807
         Other investments ....................................................................           --             1,145
                                                                                                     ---------       ---------
         Total investments and cash ...........................................................        252,649         257,232
                                                                                                     ---------       ---------

Premiums in course of collection ..............................................................         30,581          76,321
Commissions receivable ........................................................................          2,115           7,823
Accrued investment income .....................................................................          3,184           3,219
Prepaid reinsurance premiums ..................................................................         29,073          25,699
Reinsurance receivable on paid and unpaid losses and loss adjustment expenses .................        227,200         200,017
Federal income tax recoverable ................................................................          2,376             398
Net deferred Federal and foreign income tax benefit ...........................................         13,171           8,002
Deferred policy acquisition costs .............................................................          4,880           4,303
Goodwill ......................................................................................          5,916           3,855
Other assets ..................................................................................          7,857           5,217
                                                                                                     ---------       ---------
         Total assets .........................................................................      $ 629,002       $ 592,086
                                                                                                     =========       =========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Reserves for losses and loss adjustment expenses ............................................      $ 370,923       $ 342,444
  Unearned premium ............................................................................         58,212          51,295
  Reinsurance balances payable ................................................................         33,013          24,858
  Notes payable to banks ......................................................................         25,000          23,500
  Net deferred state and local income tax .....................................................            553           1,152
  Accounts payable and other liabilities ......................................................          6,520           5,571
                                                                                                     ---------       ---------
         Total liabilities ....................................................................        484,221         448,820
                                                                                                     ---------       ---------

Stockholders' equity:
  Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued ...................           --              --
  Common stock, $.10 par value, authorized 10,000,000 shares,
    issued 8,455,670 in 1999 and 8,447,926 in 1998 ............................................            846             845
  Additional paid-in capital ..................................................................         39,447          39,332
  Treasury stock held at cost, 48,700 shares in 1999 ..........................................           (700)           --
  Accumulated other comprehensive income (loss)................................................         (1,391)          5,747
  Retained earnings ...........................................................................         96,579          97,342
                                                                                                     ---------       ---------
         Total stockholders' equity ...........................................................        134,781         143,266
                                                                                                     ---------       ---------

Total liabilities and stockholders' equity ....................................................      $ 624,002       $ 592,086
                                                                                                     =========       =========
</TABLE>

      See accompanying notes to interim consolidated financial statements.


                                       3
<PAGE>   4
                   THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                   (In thousands, except net income per share)


<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED
                                                              SEPTEMBER 30,
                                                        -----------------------
                                                          1999           1998
                                                        --------       --------
<S>                                                     <C>            <C>
                                                              (Unaudited)

Revenues:
  Net earned premium .............................      $ 15,258       $ 19,030
  Commission income ..............................          (460)         1,334
  Net investment income ..........................         4,003          3,724
  Net realized capital gains (losses) ............           (14)           168
  Other income ...................................            83            104
                                                        --------       --------
         Total revenues ..........................        18,870         24,360
                                                        --------       --------

Operating expenses:
  Net losses and loss adjustment expenses incurred        16,502         11,677
  Commission expense .............................         3,099          2,813
  Other operating expenses .......................         6,375          5,445
  Interest expense ...............................           354            403
                                                        --------       --------
         Total operating expenses ................        26,330         20,338
                                                        --------       --------

Income (loss) before income tax expense ..........        (7,460)         4,022
                                                        --------       --------

Income tax expense (benefit):
    Current ......................................          (320)           799
    Deferred .....................................        (2,332)           341
                                                        --------       --------
         Total income tax expense (benefit) ......        (2,652)         1,140
                                                        --------       --------

Net income (loss) ................................      $ (4,808)      $  2,882
                                                        ========       ========


Net income (loss) per common share:
         Basic ...................................      $  (0.57)      $   0.34
         Diluted .................................      $  (0.57)      $   0.34

Average common shares outstanding:
         Basic ...................................         8,407          8,423
         Diluted .................................         8,410          8,455
</TABLE>


      See accompanying notes to interim consolidated financial statements.


                                       4
<PAGE>   5
                   THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                   (In thousands, except net income per share)


<TABLE>
<CAPTION>
                                                            NINE MONTHS ENDED
                                                              SEPTEMBER 30,
                                                        ------------------------
                                                          1999           1998
                                                        --------       --------
<S>                                                     <C>            <C>
                                                              (Unaudited)
Revenues:
  Net earned premium .............................      $ 52,022       $ 53,452
  Commission income ..............................           228          3,715
  Net investment income ..........................        11,909         11,394
  Net realized capital gains .....................           777          1,405
  Other income ...................................           315            720
                                                        --------       --------
         Total revenues ..........................        65,251         70,686
                                                        --------       --------

Operating expenses:
  Net losses and loss adjustment expenses incurred        37,479         31,040
  Commission expense .............................        10,863          8,908
  Other operating expenses .......................        18,091         16,873
  Interest expense ...............................         1,087          1,134
                                                        --------       --------
         Total operating expenses ................        67,520         57,955
                                                        --------       --------

Income (loss) before income tax expense ..........        (2,269)        12,731
                                                        --------       --------

Income tax expense (benefit):
   Current .......................................           372          2,976
   Deferred ......................................        (1,878)           364
                                                        --------       --------
         Total income tax expense (benefit) ......        (1,506)         3,340
                                                        --------       --------

Net income (loss) ................................      $   (763)      $  9,391
                                                        ========       ========


Net income (loss) per common share:
   Basic .........................................      $  (0.09)      $   1.12
   Diluted .......................................      $  (0.09)      $   1.11

Average common shares outstanding:
   Basic .........................................         8,423          8,406
   Diluted .......................................         8,425          8,453
</TABLE>


      See accompanying notes to interim consolidated financial statements.


                                       5
<PAGE>   6
                   THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                               NINE MONTHS ENDED
                                                                                 SEPTEMBER 30,
                                                                           -----------------------
                                                                             1999           1998
                                                                           --------       --------
<S>                                                                        <C>            <C>
                                                                                  (Unaudited)
Operating activities:
    Net income (loss) ...............................................      $   (763)      $  9,391
    Adjustments to reconcile net income (loss) to net
       cash provided by (used in) operating activities:
      Depreciation & amortization ...................................         1,262            672
      Reinsurance receivable on paid and unpaid
       losses and loss adjustment expenses ..........................       (27,184)       (23,734)
      Reserve for losses and loss adjustment expenses ...............        28,479         20,742
      Prepaid reinsurance premiums ..................................        (3,374)        (5,205)
      Unearned premium ..............................................         6,917          4,436
      Premiums in course of collection ..............................        (4,260)       (11,512)
      Commissions receivable ........................................         5,708          5,208
      Deferred policy acquisition costs .............................          (576)           743
      Accrued investment income .....................................            41            (24)
      Reinsurance balances payable ..................................        8,457          3,028
      Federal and foreign income tax ................................        (2,011)           114
      Net deferred Federal and foreign income tax ...................        (1,326)           497
      Net realized capital (gains) ..................................          (777)        (1,405)
      Other .........................................................        (2,342)        (3,759)
                                                                           --------       --------
        Net cash provided by (used in) operating activities .........         8,251           (808)
                                                                           --------       --------
Investing activities:
    Fixed maturities, available-for-sale
      Redemptions and maturities ....................................        19,595         24,074
      Sales .........................................................        39,287         23,742
      Purchases .....................................................       (51,187)       (50,810)
    Equity securities, available-for-sale
      Sales .........................................................         2,804          3,207
      Purchases .....................................................        (7,197)        (1,355)
    Sale of other investments .......................................         1,145          1,262
    Net sales (purchases) of short-term investments .................        (9,618)         5,431
    Payable for securities purchased ................................          (430)          (889)
    Payment for purchase of MTC, net of cash acquired ...............          --           (5,321)
    Payment for purchase of Anfield, net of cash acquired ...........        (2,591)          --
    Purchase of property and equipment ..............................          (523)          (850)
                                                                           --------       --------
      Net cash provided by (used in) investing activities ...........        (8,715)        (1,509)
                                                                           --------       --------
Financing activities:
   Stock repurchase program .........................................          (700)          --
   Proceeds from bank loan ..........................................         1,500          2,500
   Repayment of note payable ........................................          --             (354)
   Proceeds from exercise of stock options ..........................            44            894
                                                                           --------       --------
      Net cash provided by financing activities .....................           844          3,040
                                                                           --------       --------

Increase in cash ....................................................           380            723
Cash at beginning of year ...........................................         2,807          1,251
                                                                           --------       --------
Cash at end of period ...............................................      $  3,187       $  1,974
                                                                           ========       ========

Supplemental schedule of non-cash investing and financing activities:
    Issuance of  stock to Directors .................................      $     72       $     72
    Federal income tax paid .........................................         1,650          1,600
    Interest paid ...................................................           976          1,078
</TABLE>


      See accompanying notes to interim consolidated financial statements.


                                       6
<PAGE>   7
                   THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

               Notes to Interim Consolidated Financial Statements


(1)   Accounting Policies

      The interim financial statements are unaudited but reflect all adjustments
      which, in the opinion of management, are necessary to provide a fair
      statement of the results of The Navigators Group, Inc. and its
      subsidiaries (the "Company") for the interim periods presented. All such
      adjustments are of a normal recurring nature. The results of operations
      for any interim period are not necessarily indicative of results for the
      full year. These financial statements should be read in conjunction with
      the financial statements and notes contained in the Company's Form 10-K
      for the year ended December 31, 1998. Certain amounts for prior years have
      been reclassified to conform to the current year's presentation.

(2)   Reinsurance Ceded

      The Company's ceded earned premiums were $19,587,000 and $22,523,000 for
      the three months ended September 30, 1999 and 1998, respectively, and were
      $53,795,000 and $59,046,000 for the nine months ended September 30, 1999
      and 1998, respectively. The Company's ceded incurred losses were
      $39,810,000 and $35,704,000 for the three months ended September 30, 1999
      and 1998, respectively, and were $92,146,000 and $76,177,000 for the nine
      months ended September 30, 1999 and 1998, respectively.

(3)   Acquisition of Anfield Insurance Services, Inc.

      In April 1999, the Company purchased 100% of Anfield Insurance Services,
      Inc. ("Anfield"), an insurance agency located in San Francisco,
      California. The purchase price of approximately $2,700,000 was funded
      through a bank loan and working capital. Goodwill of $2,300,000 was
      recorded in connection with the transaction and is being amortized over 20
      years.

(4)   Segments of an Enterprise

      The Company's subsidiaries are primarily engaged in the writing and
      management of property and casualty insurance. The Company's segments
      include the Insurance Companies, the Somerset Companies and the Lloyd's
      operations, each of which is managed separately. The Insurance Companies
      consist of Navigators Insurance Company and NIC Insurance Company and are
      primarily engaged in underwriting marine insurance and related lines of
      business. The Somerset Companies are underwriting management companies
      which produce, manage and underwrite insurance and reinsurance for both
      affiliated and non-affiliated companies. The Lloyd's operations underwrite
      marine and related lines of business at Lloyd's of London as corporate
      members with limited liability and a Lloyd's agency. The Insurance
      Companies and the Lloyd's operations are evaluated based on their GAAP
      underwriting results. The Somerset Companies are evaluated based on their
      GAAP operating results.

      The Insurance Companies and the Lloyd's operations are measured taking
      into account net premiums earned, incurred losses and loss expenses,
      commission expense and other underwriting expenses. The Somerset
      Companies' results include commission income less other operating
      expenses. Each segment also maintains their own investments, on which they
      earn income and realize capital gains or losses. Other operations include
      intersegment income and expense in the form of affiliated commissions, as
      well as income and expense from corporate operations.


                                       7
<PAGE>   8
Financial data by segment for the periods indicated were as follows:


<TABLE>
<CAPTION>
                                                                            Three Months Ended              Nine Months Ended
                                                                                September 30,                  September 30,
                                                                           -----------------------       -----------------------
                                                                             1999           1998           1999           1998
                                                                           --------       --------       --------       --------
<S>                                                                        <C>            <C>            <C>            <C>
                                                                                              (In thousands)

Revenue, excluding net investment income and
   realized gains on investments:
Insurance Companies .................................................      $  9,173       $ 13,929       $ 32,267       $ 38,869
Somerset Companies ..................................................          (153)         3,809          3,400         10,233
Lloyd's operations ..................................................         6,311          5,203         20,251         14,888
Other operations (includes corporate activity and
   consolidating adjustments) .......................................          (450)        (2,473)        (3,853)        (6,103)
                                                                           --------       --------       --------       --------
      Total .........................................................      $ 14,881       $ 20,468       $ 52,565       $ 57,887
                                                                           ========       ========       ========       ========



Income (loss) before income tax expense (benefit):
Insurance Companies .................................................      $ (1,662)      $  5,147       $  7,672       $ 16,048
Somerset Companies ..................................................        (3,677)          (117)        (7,184)        (1,321)
Lloyd's operations ..................................................        (1,996)            97         (2,033)           287
Other operations ....................................................          (125)        (1,105)          (724)        (2,283)
                                                                           --------       --------       --------       --------
Total ...............................................................      $ (7,460)      $  4,022       $ (2,269)      $ 12,731
                                                                           ========       ========       ========       ========



Income tax expense (benefit):
Insurance Companies .................................................      $ (1,405)      $  1,277       $  1,050       $  3,990
Somerset Companies ..................................................        (1,264)           270         (2,379)           218
Lloyd's operations ..................................................           221           (221)           221           (221)
Other operations ....................................................          (204)          (186)          (398)          (647)
                                                                           --------       --------       --------       --------
         Total ......................................................      $ (2,652)      $  1,140       $ (1,506)      $  3,340
                                                                           ========       ========       ========       ========


Net income (loss):
Insurance Companies .................................................      $   (257)      $  3,870       $  6,622       $ 12,058
Somerset Companies ..................................................        (2,413)          (387)        (4,805)        (1,539)
Lloyd's operations ..................................................        (2,217)           318         (2,254)           508
Other operations ....................................................           (79)          (919)          (326)        (1,636)
                                                                           --------       --------       --------       --------
Total ...............................................................      $ (4,808)      $  2,882       $   (763)      $  9,391
                                                                           ========       ========       ========       ========
</TABLE>



(4)   Comprehensive Income

      SFAS No. 130 establishes standards for the reporting and presentation of
      comprehensive income and its components in the financial statements.
      Comprehensive income encompasses all changes in stockholders' equity
      (except those arising from transactions with owners) and includes net
      income, net unrealized capital gains or losses on available for sale
      securities and foreign currency translation adjustments. Application of
      SFAS No. 130 did not impact amounts previously reported for net income or
      affect the comparability of previously issued financial statements.


                                       8
<PAGE>   9
The following table summarizes comprehensive income for the three months ended
September 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                                 September 30,
                                                                            ---------------------
                                                                              1999         1998
                                                                            -------       -------
<S>                                                                         <C>           <C>
                                                                                (In thousands)

Net income (loss) ....................................................      $(4,808)      $ 2,882
                                                                            -------       -------
Other comprehensive income, net of tax:
  Net unrealized gains (losses) on securities available for sale:
      Unrealized holding gain (loss) arising during period
      (net of tax expense (benefit) of $(928) for 1999 and
      $771 for 1998) .................................................       (1,723)        1,432
      Less: reclassification adjustment for gains (losses) included in
            net income (net of income tax expense of $(12) for
            1999 and $206 for 1998) ..................................           22           382
                                                                            -------       -------
         Net unrealized gain (loss) on securities ....................       (1,745)        1,050

   Foreign currency translation gains (losses) adjustment, net of tax          (342)           53
                                                                            -------       -------
            Other comprehensive income (loss) ........................       (2,087)        1,103
                                                                            -------       -------

                Comprehensive income (loss) ..........................      $(6,895)      $ 3,985
                                                                            =======       =======
</TABLE>


The following table summarizes comprehensive income for the nine months ended
September 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                             September 30,
                                                                        ---------------------
                                                                          1999          1998
                                                                        -------       -------
<S>                                                                     <C>           <C>
                                                                            (In thousands)

Net income (loss) ................................................      $  (763)      $ 9,391
                                                                        -------       -------
Other comprehensive income, net of tax:
  Net unrealized gains (losses) on securities available for sale:
      Unrealized holding gain (loss) arising during period
      (net of tax (benefit) expense of $(3,374) for 1999 and
      $925 for 1998) .............................................       (6,266)        1,718
      Less: reclassification adjustment for gains included in
            net income (net of income tax expense of $248 for 1999
            and $639 for 1998) ...................................          587         1,186
                                                                        -------       -------
        Net unrealized gains (losses) on securities ..............       (6,853)          532

  Foreign currency translation gain (loss) adjustment, net of tax          (285)          152
                                                                        -------       -------
            Other comprehensive income (loss) ....................       (7,138)          684
                                                                        -------       -------

               Comprehensive income (loss) .......................      $(7,901)      $10,075
                                                                        =======       =======
</TABLE>


                                       9
<PAGE>   10
The following table summarizes the components of accumulated other comprehensive
income:


<TABLE>
<CAPTION>
                                                                              September 30,     December 31,
                                                                                  1999              1998
                                                                              -------------     ------------
<S>                                                                           <C>               <C>
                                                                                      (In thousands)
Net unrealized gains (losses) on securities available-for-sale (net of
   tax (benefit) expense of $(503) in 1999 and $3,187 in 1998) .......           $  (935)          $ 5,919
Foreign currency translation (loss) adjustment, net of tax ...........              (456)             (172)
                                                                                 -------           -------
Accumulated other comprehensive income (loss) ........................           $(1,391)          $ 5,747
                                                                                 =======           =======
</TABLE>

(5)   Future Application of Accounting Standards

      SFAS No. 133, Accounting for Derivative Instruments and Hedging
      Activities, was issued in June 1998 and establishes accounting and
      reporting standards for derivative instruments, including certain
      derivative instruments embedded in other contracts, (collectively referred
      to as derivatives) and for hedging activities. It requires that an entity
      recognize all derivatives as either assets or liabilities in the statement
      of financial position and measure those instruments at fair value. In June
      1999, SFAS No. 137 was issued which deferred the effective date of SFAS
      No. 133 from being effective for all fiscal quarters of fiscal years
      beginning after June 15, 1999 to all fiscal quarters of all fiscal years
      beginning after June 15, 2000. Earlier application is encouraged, but it
      is permitted only as of the beginning of any fiscal quarter that begins
      after issuance of this statement. SFAS No. 133 should not be applied
      retroactively to financial statements of prior periods. The adoption of
      this statement is not expected to have a material effect on the Company's
      results of operations or financial condition.

(6)   Adoption of Accounting Standards

      In December 1997, the American Institute of Certified Public Accountants
      issued Statement of Position No. 97-3, Accounting by Insurance and Other
      Enterprises for Insurance Related Assessments, ("SOP 97-3"). SOP 97-3,
      effective for fiscal years beginning after December 15, 1998, establishes
      standards for accounting for guaranty-fund and certain other insurance
      related assessments. The adoption of this statement did not have a
      material effect on the Company's results of operations or financial
      condition.

      SOP 98-5, Reporting the Costs of Start-Up Activities, was issued in April
      1998 and requires costs of start-up activities and organization costs to
      be expensed as incurred. SOP 98-5 is effective for fiscal years beginning
      after December 15, 1998. Restatement of previously issued financial
      statements is not permitted. The adoption of the SOP did not have a
      material effect on the Company's results of operations or financial
      condition.


                                       10
<PAGE>   11
                   THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES


MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

         The accompanying consolidated financial statements consisting of the
accounts of The Navigators Group, Inc., a Delaware holding company, and its
fifteen wholly owned subsidiaries, are prepared on the basis of generally
accepted accounting principles. Unless the context otherwise requires, the term
"Company" as used herein means The Navigators Group, Inc. and its subsidiaries.
All significant intercompany transactions and balances are eliminated.

         The Company's two insurance subsidiaries are Navigators Insurance
Company ("Navigators Insurance"), which includes a United Kingdom Branch ("UK")
Branch and NIC Insurance Company ("NIC"). Navigators Insurance is the Company's
largest insurance subsidiary and has been active since 1983. It specializes
principally in underwriting marine insurance and related lines of business. NIC,
a wholly owned subsidiary of Navigators Insurance, began operations in 1990. It
underwrites a small book of surplus lines insurance in certain states and cedes
100% of its gross direct writings from this business to Navigators Insurance.
Navigators Insurance and NIC are collectively referred to herein as the
"Insurance Companies".

         Five of the Company's subsidiaries are underwriting management
companies: Somerset Marine, Inc., Somerset Insurance Services of Texas, Inc.,
Somerset Insurance Services of California, Inc., Somerset Insurance Services of
Washington, Inc. and Somerset Marine (UK) Limited ("Somerset UK") (collectively,
the "Somerset Companies"). The Somerset Companies produce, manage and underwrite
insurance and reinsurance for Navigators Insurance, NIC and four unaffiliated
insurance companies.

         The Somerset Companies specialize principally in producing marine
insurance premium. They underwrite marine business for a pool of insurance
companies with Navigators Insurance having a 75% participation in the pool for
1999. The Somerset Companies derive their revenue from commissions, service fees
and cost reimbursement arrangements from the Company, Navigators Insurance and
the unaffiliated insurers. Commissions are earned both from a fixed percentage
of premiums and from underwriting profits on business placed with the
participating insurance companies within the pool. Property and casualty
insurance premiums historically have been cyclical in nature and, accordingly,
during a "hard market" demand for property and casualty insurance exceeds
supply, or capacity, and as a result, premiums and commissions may increase. On
the downturn of the property and casualty cycle, supply exceeds demand, and as a
result, premiums and commissions may decrease.


                                       11
<PAGE>   12
         Navigators Holdings (UK) Limited is a holding company for the Company's
UK subsidiaries. Somerset UK produces business for the UK Branch of Navigators
Insurance. Navigators Corporate Underwriters Limited ("NCUL") is admitted to do
business at Lloyd's of London as a corporate member with limited liability. In
January 1998, the Company acquired Mander, Thomas & Cooper (Underwriting
Agencies) Limited ("MTC"), a Lloyd's of London marine underwriting managing
agency which manages Lloyd's Syndicate 1221, and its wholly owned subsidiary,
Millennium Underwriting Limited ("Millennium"), a Lloyd's corporate member with
limited liability. In August 1999, MTC formed Pennine Underwriting Limited, an
underwriting managing agency located in Northern England, which underwrites
cargo and engineering business for Lloyd's Syndicate 1221.

         In April 1999, the Company acquired Anfield, an insurance agency
located in San Francisco, California, which specializes in underwriting general
liability insurance coverage for small artisan and general contractors on the
West Coast.

         The Company's revenue is primarily comprised of premiums, commissions
and investment income. The Insurance Companies derive the majority of their
business from business written by the Somerset Companies. The Insurance
Companies are managed by Somerset Marine, Inc.


RESULTS OF OPERATIONS

         The Company's 1999 and 1998 results of operations reflect intense
market competition in the marine business.

         The third quarter 1999 results include a charge against earnings of
approximately $6.5 million pretax resulting in an after tax charge of
approximately $4.2 million or $0.50 per fully diluted share. The charge is the
result of nonrecoverable reinsurance from New Cap Reinsurance Corporation
Limited ("New Cap Re"). As reported in the Company's September 3, 1999 news
release, New Cap Re, which participated in the Company's 1997 and 1998
reinsurance programs, has been put under the control of an Administrator for
possible liquidation.

         Revenues. Gross written premium for the first nine months of 1999
decreased 3.5% to $112,667,000 from $116,740,000 for the first nine months of
1998.


                                       12
<PAGE>   13
      The following table sets forth the Company's gross written premium by line
of business and net written premium in the aggregate for the periods indicated:

<TABLE>
<CAPTION>
                                                  Nine Months Ended September 30,
                                    ----------------------------------------------------------
                                               1999                            1998
                                    -------------------------        -------------------------
<S>                                 <C>             <C>              <C>            <C>

                                                      (Dollars in thousands)

Lloyd's Operations:
  Marine .....................      $  32,109              28%       $  17,920             15%
Insurance Companies:
  Marine .....................         65,353              58           46,330             40
  Aviation ...................            354            --             23,146             20
  Onshore Energy .............            937               1            8,350              7
  Engineering and Construction            617               1            8,163              7
  Program Insurance ..........         13,142              12           12,065             10
  Other ......................            155            --                766              1
                                    ---------       ---------        ---------      ---------

Gross Written Premium ........        112,667             100%         116,740            100%
                                    ---------       ---------        ---------      ---------

Ceded Written Premium ........        (57,172)                         (64,195)
                                    ---------                        ---------

Net Written Premium ..........      $  55,495                        $  52,545
                                    =========                        =========
</TABLE>


LLOYD'S OPERATIONS

         Lloyd's Marine Premium. The Lloyd's marine premium is generated as the
result of NCUL and Millennium providing capacity to Lloyd's Syndicate 1221
managed by MTC. The premiums, losses and expenses from the Lloyd's marine
syndicates are included in the Company's financials but are not included in the
Insurance Companies' results since NCUL and Millennium are wholly owned by the
parent company. The Lloyd's gross written premium for the nine months ended
September 30, 1999 increased 79.2% from the same period in 1998 due to the
Company's increased participation in Syndicate 1221.

INSURANCE COMPANIES

         Marine Premium. Marine gross written premium increased 41% when
comparing the first nine months of 1999 to the first nine months of 1998
primarily due to, beginning July 1, 1998, Navigators Insurance writing 100% of
the marine risk and then ceding to the other pool members. Prior to July 1,
1998, each pool member's gross written premium was equal to the pool member's
participation in the pool instead of assuming its participation from Navigators
Insurance. Navigators Insurance's participation in the marine pools increased
from 60% in 1998 to 75% in 1999.

         Aviation Premium. Aviation gross written premium decreased from the
first nine months of 1998 to 1999 as the result of Navigators Insurance's
withdrawal from the aviation business effective October 1998, other than a small
amount of war and satellite business, due to inadequate pricing in the aviation
insurance market.


                                       13
<PAGE>   14
         Onshore Energy Premium. In 1996, Navigators Insurance began to
underwrite onshore energy business which principally focuses on the oil and gas,
chemical and petrochemical, and power generation industries with coverages
primarily for property damage and machinery breakdown. The decrease in the
premium from 1998 to 1999 was due to the Company's decision in 1999 to close the
Somerset Asia Pacific Pty Limited office in Australia which produced the
majority of this business. Beginning in mid 1999, all of the onshore energy
business is being written through the Company's facilities at Lloyd's in which
the UK Branch participates.

         Engineering and Construction Premium. In 1997, the Company began
writing engineering and construction business consisting of coverages for
construction projects including machinery, equipment and loss of use due to
delays. The decrease in the premium from 1998 to 1999 was due to the Company's
decision in 1999 to close the Somerset Asia Pacific Pty Limited office in
Australia which produced the majority of this business. Beginning in mid 1999,
all of the engineering and construction business is being written through the
Company's facilities at Lloyd's in which the UK Branch participates.

         Program Insurance Premium. The program business is primarily produced
by Anfield writing contractors' general liability premium consisting of
liability insurance coverage for small artisan and general contractors. The
Company started writing a package policy for restaurants and taverns in the
third quarter of 1999.

         Ceded Premium. In the ordinary course of business, the Company
reinsures certain insurance risks with unaffiliated insurance companies for the
purpose of limiting its maximum loss exposure, protecting against catastrophic
losses, and maintaining desired ratios of net premiums written to statutory
surplus. In general, the Company retains more of the premium produced by the
Lloyd's operations than the premium produced by the Insurance Companies.

         Net Written Premium. Net written premium increased 5.6% for the first
nine months of 1999 to $55,495,000 compared to $52,545,000 for the same period
in 1998 primarily due to the increase in the marine business partially offset by
decreases in other lines as described above and by $825,000 of reinsurance
reinstatement premium related to one loss.

         Net Earned Premium. Net earned premium decreased 2.7% for the first
nine months of 1999 to $52,022,000 compared to $53,452,000 for the first nine
months of 1998.

         Commission Income. Commission income generated by the Somerset
Companies decreased from $3,715,000 for the first nine months of 1998 to
$228,000 for the first nine months of 1999. The decrease was primarily due to
the losses related to New Cap Re, the Company's reduction of its commission
incomethose estimates due to the extremely competitive rate environment and
Navigators Insurance's increased participation in the marine pool which resulted
in the Company receiving less commission income from the unaffiliated members of
the pool.


                                       14
<PAGE>   15
         Net Investment Income. Net investment income increased 4.5% to
$11,909,000 during the first nine months of 1999 from $11,394,000 during the
corresponding period in 1998 and increased 7.5% to $4,003,000 during the three
months ended September 30, 1999 from $3,724,000 during the corresponding period
in 1998. The increase in net investment income is due to the Lloyd's operations
which earn income on investments held by the Lloyd's syndicates in which the
Company participates. Such investments represent funds due from the syndicates
to the Company.

         Net Realized Capital Gains. Pre-tax income included $777,000 of
realized capital gains for the first nine months of 1999 compared to $1,405,000
for the same period last year. On an after tax basis, the realized capital gains
were $0.06 per share in 1999 and $0.11 per share in 1998. Pre-tax income for the
three months ended September 30, 1999 and 1998 included realized capital losses
of $14,000 and gains of $168,000, respectively. On an after tax basis the
realized capital gains for the three months ended September 30, 1998 represented
$0.01 per share. There was no effect on the earnings per share for the three
months ended September 30, 1999.

         Operating Expenses.

         Net Loss and Loss Adjustment Expenses Incurred. The ratio of net loss
and loss adjustment expenses incurred to net earned premium was 72.0% and 58.1%
during the first nine months of 1999 and 1998, respectively. This increase was
primarily due to the losses ceded to New Cap Re which have been determined to be
uncollectible due to New Cap Re being put into receivership and to a lesser
extent due to higher loss ratios in the Lloyd's operations including one
unaffiliated syndicate from which we have since withdrawn. The ratios were
108.2% and 61.4% for the three months ended September 30, 1999 and 1998,
respectively. The New Cap Re losses represent 11.5% and 39.3% of the loss ratio
for the nine and three months ended September 30, 1999, respectively.

         Commission Expense. Commission expense as a percentage of net earned
premium was 20.9% and 16.7% during the first nine months of 1999 and 1998,
respectively, and 20.3% and 14.8% for the three months ended September 30, 1999
and 1998, respectively. The increase was primarily due to higher commission
rates in the Lloyd's operations.

         Other Operating Expenses. Other operating expenses increased 7.2% to
$18,091,000 during the first nine months of 1999 from $16,873,000 during the
corresponding period of 1998 and increased 17.1% for the three months ended
September 30, 1999 compared to the same period in 1998. This increase was
primarily due to the acquisition of Anfield on April 2, 1999 and increased
expenses from the Company's Lloyd's operations due to the Company's increased
participation in its Lloyd's syndicate, partially offset by expense reductions
in the Company's other foreign operations.

         Interest Expense. Interest expense was $1,087,000 during the first nine
months of 1999 compared to $1,134,000 during the corresponding period of 1998.
The interest on the increase in the loan balance under the Company's Amended
Credit Agreement (as defined below) from $22,500,000 at September 30, 1998 to
$25,000,000 at September 30, 1999, was partially offset by lower interest rates
for the 1999 period.


                                       15
<PAGE>   16
      Income Taxes. The Company had a tax benefit of $1,506,000 on a pretax loss
of $2,269,000 for the nine months ended September 30, 1999. The effective tax
benefit rate of 66.4% is primarily the result of tax exempt investment income
along with the pretax loss. The current tax expense for the nine months ended
September 30, 1999 is the result of the Company's alternative minimum tax
position. The effective tax rate was 26.2% for the nine months ended September
30, 1998.

      Net Income. The Company had a net loss of $763,000 for the first nine
months of 1999 compared to net income of $9,391,000 for the same period last
year. On a diluted per share basis, this represents a net loss per share of
$0.09 and net income per share of $1.11 for the first nine months of 1999 and
1998, respectively. The Company had net loss of $4,808,000 or $0.57 per share
for the three months ended September 30, 1999 compared to net income of
$2,882,000 or $0.34 per share for the same period in 1998. The decrease in net
income is primarily due to the New Cap Re losses and higher loss ratios in the
Lloyd's operation.


LIQUIDITY AND CAPITAL RESOURCES

      Cash flow from operations was $8,251,000 and $(808,000) for the first nine
months of 1999 and 1998, respectively. Invested assets and cash decreased to
$252,649,000 at September 30, 1999 from $257,232,000 at December 31, 1998 due to
decreases in the unrealized investment gains and the purchase of Anfield.

      The Company's bank credit facility currently provides for a $25 million
revolving line of credit facility, which reduces each quarter by amounts ranging
between $1,000,000 to $2,250,000 beginning January 1, 2000 until it terminates
on November 19, 2003, and a $60 million letter of credit facility. At September
30, 1999, $25,000,000 in loans were outstanding under the revolving line of
credit facility at an interest rate of 6.3%. The letter of credit facility is
utilized primarily by NCUL and Millennium to participate in Lloyd's syndicate
1221 managed by MTC. At September 30, 1999, letters of credit with an aggregate
face amount of $42,885,000 were issued under the letter of credit facility. No
letters of credit have been drawn upon.

      As of September 30, 1999, the Company's consolidated stockholders' equity
was $134,781,000 compared to $143,266,000 at December 31, 1998. The decrease was
primarily due to the net loss for the nine months ended September 30, 1999 and
decreases in the unrealized gains in the investment portfolio.

YEAR 2000 COMPLIANCE

      The Company is aware of the issues related to existing computer systems
and has replaced its major computer systems with systems that are Year 2000
compliant and thereby will benefit from state-of-the-art integrated systems
along with being Year 2000 compliant. The systems were implemented and tested in
1999. The actions being taken to resolve the Company's Year 2000 issue, as
described in detail in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, are on schedule. There can be no assurance that the
systems of other companies on which the Company's systems rely will also be
timely converted or that any such failure to convert by another company would
not have an adverse effect on the Company's systems.


                                       16
<PAGE>   17
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      There have been no material changes in the information concerning market
risk as stated in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.

STOCK REPURCHASE PROGRAM

      On January 6, 1999, the Company announced a stock repurchase program for
up to $3,000,000 of its common stock. At September 30, 1999, the Company had
repurchased 48,700 shares of stock at a cost of $700,000.


PART II - OTHER INFORMATION

Item 1.       Legal Proceedings:

              The Company is not a party to or the subject of any material
              pending legal proceedings which depart from the ordinary routine
              litigation incident to the kinds of business conducted by the
              Company, except for an assessment on Navigators Insurance by the
              Institute of London Underwriters ("ILU"). In late 1998, the ILU
              advised its forty-one members, including Navigators Insurance,
              that they were each being assessed approximately pound
              sterling 900,000 to pay for anticipated operating deficits arising
              from the ILU's long term lease of the building occupied by the ILU
              in London. This matter is currently not in litigation and
              Navigators Insurance continues to oppose the assessment as
              inequitable and inappropriate. Discussions with the ILU are
              ongoing and the Company's ultimate liability, if any, is not
              possible to forecast at the present time.

Item 2.       Changes in Securities:

              None.

Item 3.       Defaults Upon Senior Securities:

              None.


                                       17
<PAGE>   18
Item 4.       Submissions of Matters to a Vote of Securities Holders:

              None.

Item 5.       Other Information:

              None.

Item 6.       Exhibits and Reports on Form 8-K:

              (a)     Exhibits:

              Exhibit No.        Description of Exhibit

                  27.1           Financial Data Schedule

              (b)     Reports on Form 8-K:
                         There were no reports on Form 8-K filed for the nine
                         months ended September 30, 1999.




                                   SIGNATURES


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

                                     The Navigators Group,  Inc.
                                     -----------------------------------------
                                       (Registrant)


Dated:   November 15, 1999           /s/ Bradley D. Wiley
         -----------------           -----------------------------------------
                                     Bradley D. Wiley
                                     Senior Vice President, Chief Financial
                                     Officer and Secretary


                                       18
<PAGE>   19
                                INDEX OF EXHIBITS


Exhibit No.                      Description of Exhibit

    27.1                         Financial Data Schedule


                                       19