##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-11238.
 NYMAGIC, INC.
  New York
    
    13-3534162(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)919 Third Avenue, New York, NY
    
    10022(Address of principal executive offices)
    
    (Zip Code)
  
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class:
    
    Name of each exchange on which registered:Common Stock, $1.00 par value
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 o þ
 þ o
 o
  Large Accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated file o
  ̈ þ
 MARKET VALUE
  OUTSTANDING STOCK
  DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



PAGEPART IForward-looking Statements
    
    ii.Item 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    22Item 1B.
    
    Unresolved Staff Comments
    
    
    26Item 2.
    
    Properties
    
    
    26Item 3.
    
    Legal Proceedings
    
    
    27Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    27PART IIItem 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    28Item 6.
    
    Selected Financial Data
    
    
    29Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 8.
    
    Financial Statements and Supplementary Data
    
    
    43Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    43Item 9A.
    
    Controls and Procedures
    
    
    44Item 9B.
    
    Other Information
    
    
    44PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    44Item 11.
    
    Executive Compensation
    
    
    44Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    44Item 13.
    
    Certain Relationships and Related Transactions
    
    
    44Item 14.
    
    Principal Accounting Fees and Services
    
    
    44PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    45Signatures
    
    
    49Index to Consolidated Financial Statements
    
    
    F-1Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




---



##### Table of Contents



FORWARD  LOOKING STATEMENTS




---



##### Table of Contents



Part I
 
 Item 1. Business
 General
  Insurance Companies and Lloyds Corporate Capital Vehicle:
   Insurance Underwriters and Managers:
  Consolidated Investment Interests:
       1




---



##### Table of Contents



The Pools
         2




---



##### Table of Contents



Segments
   Ocean marine insurance
 Hull and Machinery Insurance
 Hull and Machinery War Risk Insurance
 Cargo Insurance
 Cargo War Risk Insurance
 Protection and Indemnity
 Charters Legal Liability
 Shoreline Marine Liability Exposures
 Marine Contractors Liability
 Maritime Employers Liability (Jones Act)
 Marine Umbrella (Bumbershoot) Liability
 Onshore and Offshore Oil and Gas Exploration and Production Exposures
 Energy Umbrella (Bumbershoot) Liability
 Petroleum and Bulk Liquid Cargo
 Inland marine/fire insurance
 Contractors Equipment
 Motor Truck Cargo
 Transit Floaters
 3




---



##### Table of Contents



Commercial Property
 Surety
  Non-marine liability insurance
  Accountants Professional Liability
 Lawyers Professional Liability
 Miscellaneous Professional Errors & Omissions
  Contractors Liability
 Commercial and Habitational Liability
 Products Liability
  Workers Compensation
 Commercial Automobile
 Directors and Officers Liability
 Employment Practices Liability
  Aircraft insurance
   4




---



##### Table of Contents



NYMAGIC Gross Premiums WrittenBy Segment
    
    Year Ended December 31,2005
    
    2004
    
    2003(Dollars in thousands)Ocean Marine
    
    $
    105,628
    
    
    
    53
    %
    
    $
    104,726
    
    
    
    57
    %
    
    $
    94,649
    
    
    
    66
    %Inland Marine/Fire
    
    
    25,000
    
    
    
    12
    %
    
    
    16,878
    
    
    
    9
    %
    
    
    16,515
    
    
    
    12
    %Other Liability
    
    
    69,346
    
    
    
    35
    %
    
    
    61,688
    
    
    
    34
    %
    
    
    28,468
    
    
    
    20
    %Subtotal
    
    
    199,974
    
    
    
    100
    %
    
    
    183,292
    
    
    
    100
    %
    
    
    139,632
    
    
    
    98
    %Run off lines (Aircraft)
    
    
    396
    
    
    
    
    
    
    
    342
    
    
    
    
    
    
    
    3,565
    
    
    
    2
    %Total
    
    $
    200,370
    
    
    
    100
    %
    
    $
    183,634
    
    
    
    100
    %
    
    $
    143,197
    
    
    
    100
    %
 NYMAGIC Net Premiums WrittenBy Segment
    
    Year Ended December 31,2005
    
    2004
    
    2003(Dollars in thousands)Ocean Marine
    
    $
    70,596
    
    
    
    53
    %
    
    $
    82,689
    
    
    
    60
    %
    
    $
    67,744
    
    
    
    69
    %Inland Marine/Fire
    
    
    8,452
    
    
    
    6
    %
    
    
    5,255
    
    
    
    4
    %
    
    
    4,833
    
    
    
    5
    %Other Liability
    
    
    54,592
    
    
    
    41
    %
    
    
    49,190
    
    
    
    36
    %
    
    
    22,961
    
    
    
    23
    %Subtotal
    
    
    133,640
    
    
    
    100
    %
    
    
    137,134
    
    
    
    100
    %
    
    
    95,538
    
    
    
    97
    %Run off lines (Aircraft)
    
    
    252
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    2,769
    
    
    
    3
    %Total
    
    $
    133,892
    
    
    
    100
    %
    
    $
    137,128
    
    
    
    100
    %
    
    $
    98,307
    
    
    
    100
    %
 Reinsurance Ceded
     5




---



##### Table of Contents



Reinsurer
    
    Amounts
    
    
    A.M. Best Rating(in millions)Lloyds Syndicates
    
    $
    58.4
    
    
    A (Excellent)Swiss Reinsurance America Corp.
    
    
    21.1
    
    
    A+ (Superior)Folksamerica Reinsurance Company
    
    
    13.1
    
    
    A (Excellent)Platinum Underwriters Reinsurance Company
    
    
    8.2
    
    
    A (Excellent)Lloyds (Equitas)
    
    
    8.1
    
    
    NR-3 (Rating Procedure Inapplicable)GE Reinsurance Corp.
    
    
    7.8
    
    
    A (Excellent)FM Global (Arkwright)
    
    
    7.5
    
    
    A+ (Superior)XL Reinsurance America Inc.
    
    
    6.9
    
    
    A+ (Superior)Liberty Mutual Insurance Company
    
    
    4.6
    
    
    A (Excellent)Berkley Insurance Company
    
    
    4.2
    
    
    A (Excellent)Everest Reinsurance
    
    
    4.1
    
    
    A+ (Superior)Total
    
    $
    144.0
   6




---



##### Table of Contents



Reserves
     7




---



##### Table of Contents



Gross
    
    
    Net(in thousands)Ocean marine
    
    $
    243,033
    
    
    $
    133,000Inland marine/fire
    
    
    27,624
    
    
    
    8,361Other liability
    
    
    172,197
    
    
    
    110,756Aircraft
    
    
    146,011
    
    
    
    37,100Total
    
    $
    588,865
    
    
    $
    289,217
  Asbestos and Environmental Reserves
      8




---



##### Table of Contents



Year ended December 31,2005
    
    2004
    
    2003(in thousands)Asbestos/EnvironmentalNet unpaid losses and loss adjustment expenses
(including IBNR) at the beginning of the period
    
    $
    12,759
    
    
    $
    11,797
    
    
    $
    12,696Net incurred losses and loss adjustment expenses
    
    
    (237
    )
    
    
    4,264
    
    
    
    753Net paid loss settlements
    
    
    638
    
    
    
    (3,196
    )
    
    
    (1,501
    )Net loss adjustment expenses payments
(cost of administering claims)
    
    
    (200
    )
    
    
    (106
    )
    
    
    (151
    )Net unpaid losses and loss adjustment expenses
(including IBNR) at end of period
    
    $
    12,960
    
    
    $
    12,759
    
    
    $
    11,797
  Year ended December 31,2005
    
    2004
    
    2003Number of claims pending at beginning of period
    
    
    475
    
    
    
    453
    
    
    
    490Number of claims reported
    
    
    96
    
    
    
    71
    
    
    
    54Number of claims settled/dismissed or otherwise resolved
    
    
    (102
    )
    
    
    (49
    )
    
    
    (91
    )Number of claims pending at end of period
    
    
    469
    
    
    
    475
    
    
    
    453
  Other Reserves
  9




---



##### Table of Contents



Loss Reserve Table
        10




---



##### Table of Contents



Year Ended December 31,Year Ended
    
    1995
    
    
    1996
    
    
    1997
    
    
    1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005December 31(Dollars in thousands)Estimated Liability for Net Unpaid Losses and Loss Adjustment Expenses229,916
    
    
    
    227,370
    
    
    
    222,335
    
    
    
    213,589
    
    
    
    196,865
    
    
    
    199,685
    
    
    
    210,953
    
    
    
    208,979
    
    
    
    242,311
    
    
    
    255,479
    
    
    
    289,217Cumulative Amount of Net Losses and Loss Adjustment Expenses Paid as a Percentage of Original Estimate:1
    
    
    Year Later
    
    
    20
    %
    
    
    17
    %
    
    
    19
    %
    
    
    20
    %
    
    
    24
    %
    
    
    28
    %
    
    
    30
    %
    
    
    8
    %
    
    
    18
    %
    
    
    17
    %2
    
    
    Years Later
    
    
    32
    %
    
    
    30
    %
    
    
    32
    %
    
    
    35
    %
    
    
    39
    %
    
    
    56
    %
    
    
    30
    %
    
    
    24
    %
    
    
    27
    %3
    
    
    Years Later
    
    
    42
    %
    
    
    42
    %
    
    
    43
    %
    
    
    43
    %
    
    
    53
    %
    
    
    64
    %
    
    
    41
    %
    
    
    32
    %4
    
    
    Years Later
    
    
    51
    %
    
    
    51
    %
    
    
    49
    %
    
    
    51
    %
    
    
    58
    %
    
    
    70
    %
    
    
    47
    %5
    
    
    Years Later
    
    
    58
    %
    
    
    56
    %
    
    
    54
    %
    
    
    55
    %
    
    
    63
    %
    
    
    72
    %6
    
    
    Years Later
    
    
    62
    %
    
    
    58
    %
    
    
    57
    %
    
    
    59
    %
    
    
    64
    %7
    
    
    Years Later
    
    
    64
    %
    
    
    61
    %
    
    
    61
    %
    
    
    60
    %8
    
    
    Years Later
    
    
    66
    %
    
    
    64
    %
    
    
    61
    %9
    
    
    Years Later
    
    
    69
    %
    
    
    64
    %10
    
    
    Years Later
    
    
    69
    %Net Liability Re-estimated including Cumulative Net Paid Losses and Loss Adjustment Expenses as a Percentage of Original Estimate:1
    
    
    Year Later
    
    
    94
    %
    
    
    90
    %
    
    
    91
    %
    
    
    94
    %
    
    
    96
    %
    
    
    105
    %
    
    
    102
    %
    
    
    99
    %
    
    
    94
    %
    
    
    95
    %2
    
    
    Years Later
    
    
    87
    %
    
    
    87
    %
    
    
    87
    %
    
    
    87
    %
    
    
    94
    %
    
    
    108
    %
    
    
    101
    %
    
    
    94
    %
    
    
    89
    %3
    
    
    Years Later
    
    
    86
    %
    
    
    85
    %
    
    
    83
    %
    
    
    84
    %
    
    
    95
    %
    
    
    104
    %
    
    
    96
    %
    
    
    90
    %4
    
    
    Years Later
    
    
    86
    %
    
    
    83
    %
    
    
    81
    %
    
    
    85
    %
    
    
    91
    %
    
    
    103
    %
    
    
    94
    %5
    
    
    Years Later
    
    
    85
    %
    
    
    82
    %
    
    
    81
    %
    
    
    82
    %
    
    
    92
    %
    
    
    102
    %6
    
    
    Years Later
    
    
    84
    %
    
    
    82
    %
    
    
    80
    %
    
    
    83
    %
    
    
    90
    %7
    
    
    Years Later
    
    
    84
    %
    
    
    80
    %
    
    
    81
    %
    
    
    82
    %8
    
    
    Years Later
    
    
    83
    %
    
    
    83
    %
    
    
    81
    %9
    
    
    Years Later
    
    
    86
    %
    
    
    82
    %10
    
    
    Years Later
    
    
    85
    %Net Cumulative
    
    
    33,485
    
    
    
    40,600
    
    
    
    43,070
    
    
    
    38,997
    
    
    
    19,372
    
    
    
    (3,595
    )
    
    
    12,891
    
    
    
    20,402
    
    
    
    27,766
    
    
    
    13,247Redundancy/(Deficiency)Gross Unpaid
    
    
    417,795
    
    
    
    411,837
    
    
    
    388,402
    
    
    
    401,584
    
    
    
    425,469
    
    
    
    411,267
    
    
    
    534,189
    
    
    
    516,002
    
    
    
    518,930
    
    
    
    503,261
    
    
    
    588,865Losses and Loss Adjustment ExpensesReinsurance
    
    
    187,879
    
    
    
    184,467
    
    
    
    166,067
    
    
    
    187,995
    
    
    
    228,604
    
    
    
    211,582
    
    
    
    323,236
    
    
    
    307,023
    
    
    
    276,619
    
    
    
    247,782
    
    
    
    299,648Recoverable on Unpaid Losses and Loss Adjustment ExpensesReserve
    
    
    442,584
    
    
    
    405,178
    
    
    
    421,977
    
    
    
    447,732
    
    
    
    460,469
    
    
    
    466,784
    
    
    
    570,300
    
    
    
    502,137
    
    
    
    480,014
    
    
    
    481,698Re-estimated GrossReserve
    
    
    246,153
    
    
    
    218,409
    
    
    
    242,712
    
    
    
    273,140
    
    
    
    282,976
    
    
    
    263,504
    
    
    
    372,238
    
    
    
    313,560
    
    
    
    265,469
    
    
    
    239,466Re-estimated Reinsurance RecoverableGross Cumulative
    
    
    (24,789
    )
    
    
    6,659
    
    
    
    (33,576
    )
    
    
    (46,148
    )
    
    
    (35,000
    )
    
    
    (55,517
    )
    
    
    (36,111
    )
    
    
    13,865
    
    
    
    38,916
    
    
    
    21,564Redundancy/(Deficiency)
   11




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Net liability for losses and loss adjustment
expenses at beginning of year
    
    $
    255,479
    
    
    $
    242,311
    
    
    $
    208,979Provision for losses and loss adjustment
expenses occurring in current year
    
    
    105,537
    
    
    
    81,518
    
    
    
    57,125Increase (decrease) in estimated losses and loss
adjustment expenses for claims occurring
in prior years(1)
    
    
    (13,247
    )
    
    
    (14,960
    )
    
    
    (1,410
    )Net loss and loss adjustment expenses
Incurred
    
    
    92,290
    
    
    
    66,558
    
    
    
    55,715Less:Losses and loss adjustment expense payments
for claims occurring during:Current year
    
    
    15,453
    
    
    
    10,287
    
    
    
    5,241Prior years
    
    
    43,099
    
    
    
    43,103
    
    
    
    17,14258,552
    
    
    
    53,390
    
    
    
    22,383Net liability for losses and loss adjustment
expenses at year end
    
    
    289,217
    
    
    
    255,479
    
    
    
    242,311Ceded unpaid losses and loss adjustment
expenses at year end
    
    
    299,648
    
    
    
    247,782
    
    
    
    276,619Gross unpaid losses and loss adjustment
expenses at year end
    
    $
    588,865
    
    
    $
    503,261
    
    
    $
    518,930
 
 (1)
    
    The adjustment to the consolidated liability for losses and
loss adjustment expenses for losses occurring in prior years
reflects the net effect of the resolution of losses for other than
full reserve value and subsequent readjustments of loss values.The $13 million decrease in 2005 primarily reflected
favorable development in the ocean marine line of
business, particularly in the 2001-2003 accident years.
Although the Companys net loss retention increased
substantially in the ocean marine line during the
2001-2003 years from previous years, the actual loss
emergence is developing less than previously anticipated.
The other liability line also reported favorable
development in years prior to 2002 resulting from a lower
than expected emergence of losses attributable to a
shorter loss reporting tail than originally estimated.
While the business written in the other liability line of
business changed substantially in 2002, if similar trends
appear in subsequent periods for accident years 2002 and
subsequent, there may be additional favorable development
to report for those periods. However, we cannot be assured
that such favorable trends will continue. Further
contributing to the increase was favorable development of
aircraft loss reserves largely attributable to the 2001
accident year. The favorable loss development in 2005 was
partially offset by net adverse loss development resulting
from provisions made for insolvent, financially impaired
reinsurers and commuted reinsurance contracts, partly as a
result of an increase in ceded incurred losses relating to
a few specific asbestos claims.The $15 million decrease in 2004 reflects favorable loss
development in the aviation line, mainly in reserves for
the terrorist attacks of September 11, 2001 on the
Pentagon and the hijacked airliner that crashed in
Pennsylvania, and in the ocean marine line of business due
to a lower than expected emergence of losses in the
1998-2001 accident years.The decrease in 2003 of $1.4 million reflects favorable
loss development arising from the ocean marine line of
business, partially offset by adverse development in the
aviation line for accident years 1997-2000. 12




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Net liability for losses and loss adjustment expenses
reported based on statutory accounting principles
    
    $
    267,955
    
    
    $
    240,376
    
    
    $
    228,760Liability for losses and loss adjustment expenses assumed
from two former pool members
(excludes $3,000, $3,096 and $3,117 at December 31, 2005,
2004 and 2003, accounted for in the statutory liability for
losses and loss adjustment expenses)
    
    
    11,609
    
    
    
    9,786
    
    
    
    4,371Other, net
    
    
    9,653
    
    
    
    5,317
    
    
    
    9,180Net liability for losses and loss adjustment expenses reported
based on GAAP
    
    
    289,217
    
    
    
    255,479
    
    
    
    242,311Ceded liability for unpaid losses and loss adjustment expenses
    
    
    299,648
    
    
    
    247,782
    
    
    
    276,619Gross liability for unpaid losses and loss adjustment expenses
    
    $
    588,865
    
    
    $
    503,261
    
    
    $
    518,930
 Regulation
      13




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in thousands)Net premiums written
    
    $
    133,892
    
    
    $
    137,128
    
    
    $
    98,307
    
    
    $
    106,140
    
    
    $
    78,438Policyholders surplus
    
    
    186,848
    
    
    
    181,633
    
    
    
    186,325
    
    
    
    180,394
    
    
    
    152,061Ratio
    
    
    .72 to 1
    
    
    
    .75 to 1
    
    
    
    .53 to 1
    
    
    
    .59 to 1
    
    
    
    .52 to 1
       14




---



##### Table of Contents



Investment Policy
   Liquidity Portfolio:
 Fixed Income Portfolio:
 Equity and Equity-Type Securities (Hedge Funds):
  Liquidity Portfolio:
 Fixed Income Portfolio:
 15




---



##### Table of Contents



Equity and Equity-Type Securities (Hedge Funds):
 Subsidiaries
    December 31, 2005
    
    Percent
    
    December 31, 2004
    
    PercentFixed Maturities Available for Sale (Fair Value):U.S. Treasury Securities
    
    $
    10,391,615
    
    
    
    1.67
    %
    
    $
    10,018,470
    
    
    
    1.59
    %Municipalities
    
    
    7,804,938
    
    
    
    1.25
    %
    
    
    7,652,500
    
    
    
    1.21
    %Corporate Bonds
    
    
    231,751,734
    
    
    
    37.24
    %
    
    
    95,061,930
    
    
    
    15.07
    %Subtotal
    
    $
    249,948,287
    
    
    
    40.16
    %
    
    $
    112,732,900
    
    
    
    17.87
    %Trading Securities (Fair Value)Collateralized Debt Obligations
    
    
    128,348,213
    
    
    
    20.62
    %
    
    
    17,767,675
    
    
    
    2.82
    %Total Fixed Maturities and Trading Portfolio
    
    $
    378,296,500
    
    
    
    60.78
    %
    
    $
    130,500,575
    
    
    
    20.69
    %Cash and Short-term Investments (at Cost)
    
    
    104,516,979
    
    
    
    16.79
    %
    
    
    309,894,313
    
    
    
    49.12
    %Total Fixed Maturities, Cash and Short-term Investments
    
    $
    482,813,479
    
    
    
    77.57
    %
    
    $
    440,394,888
    
    
    
    69.81
    %Limited Partnership Hedge Funds (at Equity)
    
    
    139,590,758
    
    
    
    22.43
    %
    
    
    190,477,346
    
    
    
    30.19
    %Total Investment Portfolio
    
    $
    622,404,237
    
    
    
    100.00
    %
    
    $
    630,872,234
    
    
    
    100.00
    %
 Relationship with Mariner Partners, Inc.
   16




---



##### Table of Contents



Voting Agreement
    
    
    Mark W. Blackman, a son of our founder and Louise B. Tollefson, is a participating
shareholder in his individual capacity. He was a member of our Board of Directors from
1979 until May 2004 and served as our President from 1988 to 1998. He has been our Chief
Underwriting Officer since June 2002 and our Executive Vice President since September
2005.
    
    John N. Blackman, Jr., a son of our founder and Louise B. Tollefson, acts as a
participating shareholder in his dual capacity as controlling member of Lionshead
Investments LLC and co-trustee of the Blackman Charitable Remainder Trust dated April 1,
2001. He was a member of our Board of Directors from 1975 until May 2004 and served as
Chairman of the Board from 1988 to 1998.
    
    Robert G. Simses acts as a participating shareholder in his capacity as sole trustee of
the Louise B. Tollefson 2000 Florida Intangible Tax Trust dated December 12, 2000 and the
Louise B. Blackman Tollefson Family Foundation dated March 24, 1998. We refer to these
trusts and foundations as the Tollefson trusts. The settlor of these trusts, Louise B.
Tollefson, is the former wife of our founder and was a member of our Board of Directors
from 1986 to 2001. Mr. Simses has been a member of our Board of Directors since 2001. He
is also Managing Partner of the law firm of Simses & Associates and President and Chief
Operating Officer of The William H. Pitt Foundation Inc.
 Amendments to the Voting Agreement
   17




---



##### Table of Contents



Voting Rights of Mariner
  
    
    the merger or consolidation of NYMAGIC into or with another corporation;
    
    the sale by NYMAGIC of all or substantially all of its assets;
    
    the dissolution and/or liquidation of NYMAGIC; or
    
    any recapitalization or stock offering of NYMAGIC.
 Election of Directors
  Nomination of Directors
   
    
    Prior to the amendment and restatement of the voting agreement, Mariner was entitled to
nominate three candidates to the Board. Following the amendment and restatement of the
voting agreement, Mariner is entitled to nominate four candidates for election to the
Board. The four current directors who were nominated by Mariner are William J.
Michaelcheck, George R. Trumbull, III, who serves as our Chairman, William D. Shaw, Jr.,
who serves as our Vice Chairman and A. George Kallop, the President and Chief Executive
Officer of the Company.
    
    Prior to the amendment and restatement of the voting agreement, each participating
shareholder was entitled to nominate one candidate to the Board. Following the amendment
and restatement of the voting agreement, each of Mark W. Blackman and Lionshead
Investments, LLC is entitled to nominate one candidate for election to the Board and
Robert G. Simses is entitled to nominate two candidates to the Board, provided that the
candidates nominated by Mark W. Blackman and Lionshead Investments, LLC and one of the
candidates nominated by Mr. Simses shall qualify as independent directors under the rules
of the New York Stock Exchange and all other applicable laws and regulations. The two
current directors nominated by Mark W. Blackman and Lionshead Investments, LLC are Glenn
Angiolillo and John R. Anderson, and the two current directors nominated by Robert G.
Simses are Robert G. Simses and Glenn R. Yanoff.
    
    Prior to the amendment and restatement of the voting agreement, our Chief Executive
Officer was entitled to nominate three candidates to the Board. Following the amendment
and restatement of the voting agreement, our Chief Executive Officer is entitled to
nominate three candidates for election to the Board, all of whom shall qualify as
independent directors under the rules of the New York Stock Exchange and all other
applicable laws and regulations. The three current directors who were nominated by Mr.
Kallop
 18




---



##### Table of Contents



are David W. Young, John T. Baily and David E. Hoffman.
  Termination Provisions
  
    
    December 31, 2010;
    
    the merger or consolidation of NYMAGIC into another corporation, the sale of all or
substantially all its assets or its dissolution and/or its liquidation;
    
    immediately upon the resignation of Mariner as an advisor to NYMAGIC, INC.; or
    
    upon written notice of such termination to Mariner from all of the participating shareholders.
 Mariner Stock Option
  
    
    Mark W. Blackman
    
    225,000 shares
    
    Lionshead Investments, LLC
    
    225,000 shares
    
    Robert G. Simses, as trustee of the Tollefson trusts
    
    900,000 shares
    Transferability of the Option
  
    
    Mariner is permitted to assign the option, in whole or in part, to any one or more of
William J. Michaelcheck, William D. Shaw, Jr., George R. Trumbull and A. George Kallop or
any other individual employed by or acting as a consultant for Mariner in connection with
NYMAGIC.
    
    With the written consent of at least two participating shareholders, Mariner or any
assignee as described above is permitted to assign the option, in whole or in part, to any
one or more other persons.
 19




---



##### Table of Contents



Consideration to Mariner
  Transferability of NYMAGIC Shares
  Mariner Investment Management Arrangement
  
    
    the liquidity portfolio (cash management);
    
    the fixed-income portfolio (fixed-income investments); and,
    
    the hedge fund and equity portfolio (alternative investment vehicles and common and preferred equities).
   20




---



##### Table of Contents



Subsidiaries
          Competition
  21




---



##### Table of Contents



Employees
  Code of Conduct and Corporate Governance Documents
   th
 Available Information
  
 Item 1A. Risk Factors.
  Our inability to assess underwriting risk accurately could reduce our net income.
  22




---



##### Table of Contents



Exposure to catastrophe or severity losses in loss reserves
  Decreases in rates or changes in terms for property and casualty insurance could reduce our net
income.
  If rating agencies downgrade their ratings of our insurance company subsidiaries, our future
prospects for growth and profitability could be significantly and adversely affected.
  Our reinsurers may not satisfy their obligations to us.
  If we are unable to purchase reinsurance and transfer risk to reinsurers or if the cost of
reinsurance increases, our net income could be reduced or we could incur a loss.
  23




---



##### Table of Contents



Our business is concentrated in ocean marine, excess and surplus lines property and excess and
surplus lines casualty 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.
  If we are not successful in developing our new specialty lines, we could experience losses.
  Our industry is highly competitive and we may not be able to compete successfully in the future.
     We are dependent on our key personnel.
  If Mariner terminates its relationship with us, our business could be adversely affected.
  24




---



##### Table of Contents



The value of our investment portfolio and the investment income we receive from that portfolio
could decline as a result of market fluctuations and economic conditions.
   Insurance laws and regulations restrict our ability to operate.
   Failure to comply with insurance laws and regulations could have a material adverse effect on our
business.
  Our holding company structure could prevent us from paying dividends on our common stock.
  Because of the concentration of the ownership of, and the thin trading in, our common stock, you
may have difficulties in selling shares of our common stock.
  25




---



##### Table of Contents



Trading in our common stock has the potential to be volatile.
   Because part of our outstanding stock is subject to a voting agreement, our other shareholders have
limited ability to impact voting decisions.
  The voting agreement and the concentration of our stock ownership in the hands of a few
shareholders could impede a change of control and could make it more difficult to effect a change
in our management.
  
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties
  
  26




---



##### Table of Contents



Item 3. Legal Proceedings
   
 Item 4. Submission of Matters to a Vote of Security Holders
  27




---



##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  2005
    
    2004High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    25.10
    
    
    $
    22.11
    
    
    $
    28.85
    
    
    $
    23.99Second Quarter
    
    
    24.75
    
    
    
    20.24
    
    
    
    27.98
    
    
    
    23.45Third Quarter
    
    
    25.73
    
    
    
    23.02
    
    
    
    26.50
    
    
    
    20.93Fourth Quarter
    
    
    26.75
    
    
    
    23.85
    
    
    
    25.86
    
    
    
    19.53
  Dividend Policy
  28




---



##### Table of Contents



Item 6. Selected Financial Data
  OPERATING DATA
    
    Year ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In thousands, except per share amounts)Revenues:Net premiums earned
    
    $
    134,557
    
    
    $
    116,333
    
    
    $
    96,394
    
    
    $
    113,457
    
    
    $
    84,633Net investment income
    
    
    36,060
    
    
    
    23,679
    
    
    
    22,394
    
    
    
    15,821
    
    
    
    17,388Commission income
    
    
    1,198
    
    
    
    461
    
    
    
    (230
    )
    
    
    1,549
    
    
    
    3,312Net realized investment gains (losses)
    
    
    (805
    )
    
    
    678
    
    
    
    550
    
    
    
    8,456
    
    
    
    2,874Other income
    
    
    334
    
    
    
    1,790
    
    
    
    1,688
    
    
    
    186
    
    
    
    285Total revenues
    
    $
    171,344
    
    
    $
    142,941
    
    
    $
    120,796
    
    
    $
    139,469
    
    
    $
    108,492Expenses:Net losses and loss adjustment
expenses incurred
    
    $
    92,290
    
    
    $
    66,558
    
    
    $
    55,715
    
    
    $
    73,356
    
    
    $
    87,901Policy acquisition expenses
    
    
    30,491
    
    
    
    25,166
    
    
    
    19,430
    
    
    
    18,899
    
    
    
    16,083General and administrative expenses
    
    
    27,183
    
    
    
    23,247
    
    
    
    19,428
    
    
    
    18,373
    
    
    
    16,952Interest expense
    
    
    6,679
    
    
    
    5,353
    
    
    
    26
    
    
    
    575
    
    
    
    395Total expenses
    
    $
    156,643
    
    
    $
    120,324
    
    
    $
    94,599
    
    
    $
    111,203
    
    
    $
    121,331Income (loss) before income taxes
    
    $
    14,701
    
    
    $
    22,617
    
    
    $
    26,197
    
    
    $
    28,266
    
    
    $
    (12,839
    )Income taxes expense (benefit)Current
    
    
    6,152
    
    
    
    3,835
    
    
    
    8,987
    
    
    
    (4,869
    )
    
    
    798Deferred
    
    
    (1,152
    )
    
    
    4,151
    
    
    
    117
    
    
    
    4,425
    
    
    
    (498
    )5,000
    
    
    
    7,986
    
    
    
    9,104
    
    
    
    (444
    )
    
    
    300Net income (loss)
    
    $
    9,701
    
    
    $
    14,631
    
    
    $
    17,093
    
    
    $
    28,710
    
    
    $
    (13,139
    )BASIC EARNINGS (LOSS) PER SHARE:Weighted average shares outstanding
    
    
    8,734
    
    
    
    9,736
    
    
    
    9,673
    
    
    
    9,277
    
    
    
    9,232Basic earnings (loss) per share
    
    $
    1.11
    
    
    $
    1.50
    
    
    $
    1.77
    
    
    $
    3.09
    
    
    $
    (1.42
    )DILUTED EARNINGS (LOSS) PER SHARE:Weighted average shares outstanding
    
    
    8,918
    
    
    
    9,916
    
    
    
    9,828
    
    
    
    9,309
    
    
    
    9,232Diluted earnings (loss) per share
    
    $
    1.09
    
    
    $
    1.48
    
    
    $
    1.74
    
    
    $
    3.08
    
    
    $
    (1.42
    )Dividends declared per share
    
    $
    .24
    
    
    $
    .24
    
    
    $
    .24
    
    
    $
    .00
    
    
    $
    .30
 29




---



##### Table of Contents



December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001(In thousands, except per share amounts)Total cash and investments
    
    $
    622,404
    
    
    $
    630,872
    
    
    $
    519,642
    
    
    $
    430,470
    
    
    $
    369,048Total assets
    
    
    1,090,419
    
    
    
    997,094
    
    
    
    875,125
    
    
    
    824,007
    
    
    
    856,997Unpaid losses and loss adjustment expenses
    
    
    588,865
    
    
    
    503,261
    
    
    
    518,930
    
    
    
    516,002
    
    
    
    534,189Notes payable
    
    
    100,000
    
    
    
    100,000
    
    
    
    
    
    
    
    6,220
    
    
    
    7,911Total shareholders equity
    
    
    239,284
    
    
    
    258,118
    
    
    
    244,291
    
    
    
    220,953
    
    
    
    199,272Book value per share
    
    $
    26.44
    
    
    $
    25.91
    
    
    $
    24.47
    
    
    $
    23.54
    
    
    $
    21.46
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Executive Overview and Highlights-2005 year
 
    
    Net income of $9.7 million or $1.09 per diluted share
    
    Gross premium growth in core lines of 9% over 2004
    
    Net investment income growth of 52% over 2004
    
    Favorable net loss reserve development reported on prior year loss reserves of $13 million
    
    Total cash and invested assets of $622 million at year end 2005
    
    Total shareholders equity of $239 million, or $26.44 per diluted share
    
    Repurchased 1,092,735 shares of common stock at $24.80 per share
    
    Total after tax impact of hurricanes Katrina and Rita to the Company were $13.9 million
or a reduction in earnings per diluted share of $1.55
    
    Formed business relationships with various program managers to produce additional
property and casualty insurance premiums
 Results of Operations
   NYMAGIC Gross Premiums WrittenBy Segment
    
    Year Ended December 31,2005
    
    2004
    
    2003(Dollars in thousands)Ocean Marine
    
    $
    105,628
    
    
    
    53
    %
    
    $
    104,726
    
    
    
    57
    %
    
    $
    94,649
    
    
    
    66
    %Inland Marine/Fire
    
    
    25,000
    
    
    
    12
    %
    
    
    16,878
    
    
    
    9
    %
    
    
    16,515
    
    
    
    12
    %Other Liability
    
    
    69,346
    
    
    
    35
    %
    
    
    61,688
    
    
    
    34
    %
    
    
    28,468
    
    
    
    20
    %Subtotal
    
    
    199,974
    
    
    
    100
    %
    
    
    183,292
    
    
    
    100
    %
    
    
    139,632
    
    
    
    98
    %Run off lines (Aircraft)
    
    
    396
    
    
    
    
    
    
    
    342
    
    
    
    
    
    
    
    3,565
    
    
    
    2
    %Total
    
    $
    200,370
    
    
    
    100
    %
    
    $
    183,634
    
    
    
    100
    %
    
    $
    143,197
    
    
    
    100
    %
 30




---



##### Table of Contents



NYMAGIC Net Premiums WrittenBy Segment
    
    Year Ended December 31,2005
    
    2004
    
    2003(Dollars in thousands)Ocean Marine
    
    $
    70,596
    
    
    
    53
    %
    
    $
    82,689
    
    
    
    60
    %
    
    $
    67,744
    
    
    
    69
    %Inland Marine/Fire
    
    
    8,452
    
    
    
    6
    %
    
    
    5,255
    
    
    
    4
    %
    
    
    4,833
    
    
    
    5
    %Other Liability
    
    
    54,592
    
    
    
    41
    %
    
    
    49,190
    
    
    
    36
    %
    
    
    22,961
    
    
    
    23
    %Subtotal
    
    
    133,640
    
    
    
    100
    %
    
    
    137,134
    
    
    
    100
    %
    
    
    95,538
    
    
    
    97
    %Run off lines (Aircraft)
    
    
    252
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    2,769
    
    
    
    3
    %Total
    
    $
    133,892
    
    
    
    100
    %
    
    $
    137,128
    
    
    
    100
    %
    
    $
    98,307
    
    
    
    100
    %
 NYMAGIC Net Premiums EarnedBy Segment
    
    Year Ended December 31,2005
    
    2004
    
    2003(Dollars in thousands)Ocean Marine
    
    $
    71,688
    
    
    
    53
    %
    
    $
    76,361
    
    
    
    66
    %
    
    $
    73,096
    
    
    
    76
    %Inland Marine/Fire
    
    
    7,340
    
    
    
    6
    %
    
    
    4,919
    
    
    
    4
    %
    
    
    4,234
    
    
    
    4
    %Other Liability
    
    
    55,277
    
    
    
    41
    %
    
    
    35,056
    
    
    
    30
    %
    
    
    16,126
    
    
    
    17
    %Subtotal
    
    
    134,305
    
    
    
    100
    %
    
    
    116,336
    
    
    
    100
    %
    
    
    93,456
    
    
    
    97
    %Run off lines (Aircraft)
    
    
    252
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    2,938
    
    
    
    3
    %Total
    
    $
    134,557
    
    
    
    100
    %
    
    $
    116,333
    
    
    
    100
    %
    
    $
    96,394
    
    
    
    100
    %
      31




---



##### Table of Contents



Year Ended December 31, 2005 as Compared to Year Ended December 31, 2004
   In thousandsGross losses incurred
    
    $
    70,779Ceded losses incurred
    
    
    64,203Net losses incurred
    
    
    6,576Reinsurance reinstatement costs
    
    
    14,755Total pre-tax loss incurred
    
    
    21,331Total after-tax loss incurred
    
    
    13,865Increase in combined ratio
    
    
    15.4
    %
         32




---



##### Table of Contents



33




---



##### Table of Contents



Years ended December 31,2005
    
    2004(in millions)Fixed maturities, available for sale
    
    $
    7.8
    
    
    $
    4.4Fixed maturities, trading securities
    
    
    8.5
    
    
    
    13.4Short-term investments
    
    
    6.2
    
    
    
    3.0Equity in earnings of limited partnerships
    
    
    17.6
    
    
    
    7.7Total investment income
    
    
    40.1
    
    
    
    28.5Investment expenses
    
    
    (4.0
    )
    
    
    (4.8
    )Net investment income
    
    $
    36.1
    
    
    $
    23.7
         34




---



##### Table of Contents



Year Ended December 31, 2004 as Compared to Year Ended December 31, 2003
         35




---



##### Table of Contents



Years ended December 31,2004
    
    
    2003(in millions)Fixed maturities, available for sale
    
    $
    4.4
    
    
    $
    4.2Fixed maturities, trading securities
    
    
    13.4
    
    
    
    12.9Short-term investments
    
    
    3.0
    
    
    
    1.9Equity in earnings of limited partnerships
    
    
    7.7
    
    
    
    8.5Total investment income
    
    
    28.5
    
    
    
    27.5Investment expenses
    
    
    (4.8
    )
    
    
    (5.1
    )Net investment income
    
    $
    23.7
    
    
    $
    22.4
 36




---



##### Table of Contents



Liquidity and Capital Resources
    37




---



##### Table of Contents



38




---



##### Table of Contents



39




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  Payments Due by PeriodTotal
    
    
    Less Than
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    More Than1 Year
    
    
    
    
    
    
    
    
    
    
    5 Years(in thousands)Long-term debt obligations
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100,000Interest on debt obligations
    
    
    55,250
    
    
    
    6,500
    
    
    
    13,000
    
    
    
    13,000
    
    
    
    22,750Losses and
loss expenses
(1)
    
    
    588,865
    
    
    
    128,113
    
    
    
    169,671
    
    
    
    100,625
    
    
    
    190,456Operating lease obligations
    
    
    18,661
    
    
    
    1,764
    
    
    
    3,507
    
    
    
    3,548
    
    
    
    9,842Funding
commitment
(2)
    
    
    16,650
    
    
    
    16,650
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    779,426
    
    
    $
    153,027
    
    
    $
    186,178
    
    
    $
    117,173
    
    
    $
    323,048
 
 (1)
    
    Represents an estimated payout based upon historical paid loss development patterns.(2)
    
    Commitment to provide capital to Tiptree. Critical accounting policies
     40




---



##### Table of Contents



Effect of recent accounting pronouncements
   41




---



##### Table of Contents



Accounting for Stock-Based
Compensation
   Impact of Inflation
   
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    Future cash flows of expected principal amounts(Dollars in millions)Total
    
    TotalThere-
    
    Amortized
    
    Fair2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    after
    
    Cost
    
    ValueTax-exempts
    
    $
    8
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8
    
    
    $
    8Average interest rate
    
    
    3.7
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Taxables
    
    $
    19
    
    
    $
    9
    
    
    $
    17
    
    
    $
    13
    
    
    $
    2
    
    
    $
    183
    
    
    $
    243
    
    
    $
    242Average interest rate
    
    
    6.3
    %
    
    
    6.4
    %
    
    
    5.2
    %
    
    
    5.3
    %
    
    
    7.0
    %
    
    
    4.8
    %
    
    
    
    
    
    
    Total
    
    $
    27
    
    
    $
    9
    
    
    $
    17
    
    
    $
    13
    
    
    $
    2
    
    
    $
    183
    
    
    $
    251
    
    
    $
    250
 42




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  43




---



##### Table of Contents



Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  Changes in Internal Controls
  
 Item 9B. Other Information
 None.
 
 PART III
 
 Item 10. Directors and Executive Officers of the Registrant
   
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management
  
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accounting Fees and Services
  44




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
 (a) 1.
    
    Financial StatementsThe list of financial statements appears in the accompanying index on page F-1.2.
    
    Financial Statement SchedulesThe list of financial statement schedules appears in the accompanying index on page F-1.3.
    
    Exhibits3.1
    
    Charter of NYMAGIC, INC. (Filed as Exhibit 99.1 to the Registrants Current Report on Form 8-K filed on December
16, 2003 (Commission File No. 1-11238) and incorporated herein by reference).3.2
    
    Amended and Restated By-Laws. (Filed as Exhibit 3.3 of the Registrants Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 (Commission File No. 1-11238) and incorporated herein by reference).4.0
    
    Specimen Certificate of common stock (Filed as Exhibit 4.0 of Amendment No. 2 to the Registrants Registration
Statement No. 33-27665) and incorporated herein by reference).+10.1
    
    Restated Management Agreement dated as of January 1, 1986, by and among Mutual Marine Office, Inc. and
Arkwright-Boston Manufacturers Mutual Insurance Company, Utica Mutual Insurance Company, Lumber Mutual Insurance
Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.2 of the
Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 1986 (Commission File No. 2-
88552)and incorporated herein by reference).+10.2
    
    Amendment No. 2 to the Restated Management Agreement, dated as of December 30, 1988, by and among Mutual Marine
Office, Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance Company, Lumber Mutual Insurance
Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.2.2. of
the Registrants Current Report on Form 8-K dated January 6, 1989 (Commission File No. 2-88552) and incorporated
herein by reference).+10.3
    
    Amendment No. 3 to the Restated Management Agreement, dated as of December 31, 1990 by and among Mutual Marine
Office, Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance Company, the Registrant and
Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.2.3. of the Registrants Annual
Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission File No. 3-27665) and incorporated
herein by reference).+10.4
    
    Restated Management Agreement dated as of January 1, 1986, by and among Mutual Inland Marine Office, Inc. and
Arkwright-Boston Manufacturers Mutual Insurance Company, Utica Mutual Insurance Company, Lumber Mutual Insurance
Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.4 of the
Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 1986 (Commission File No. 2-
88552)and incorporated herein by reference).+10.5
    
    Amendment No. 2 to the Restated Management Agreement, dated as of December 30, 1988, by and among Mutual Inland
Marine Office, Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance Company, Lumber Mutual
Insurance Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit
10.4.2 of the Registrants Current Report on Form 8-K, dated January 6, 1989 (Commission File No. 2-88552) and
incorporated herein by reference).+10.6
    
    Amendment No. 3 to the Restated Management Agreement, dated as of December 31, 1990, by and among Mutual Inland
Marine Office, Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance Company, the Registrant and
Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.4.3. of the Registrants Annual
Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission File No. 3-27665) and incorporated
herein by reference).+10.7
    
    Restated Management Agreement dated as of January 1, 1986, by and among Mutual Marine Office of the Midwest, Inc.
and Arkwright-Boston Manufacturers Mutual Insurance Company, Utica Mutual Insurance Company, Lumber Mutual
Insurance Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit
10.6 of the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 1986 (Commission File
No. 2-88552) and incorporated herein by reference).+10.8
    
    Amendment No. 2 to the Restated Management Agreement dated as of December 30, 1988, by and among Mutual Marine
Office of the Midwest, Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance Company, Lumber Mutual
Insurance Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit
10.6.2 of the Registrants Current Report on Form 8-K, dated January 6, 1989 (Commission File No. 2-88552) and
incorporated herein by reference).+10.9
    
    Amendment No. 3 to the Restated Management Agreement dated as of December 31, 1990, by and among Mutual Marine
Office of the Midwest, Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance Company, the
Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.6.3. of the
Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission File
No. 3-27665) and incorporated herein by reference).
 45




---



##### Table of Contents



+10.10
    
    Restated Management Agreement dated as of January 1, 1986, by and among Pacific Mutual Marine Office, Inc. and
Arkwright-Boston Manufacturers Mutual Insurance Company, Lumber Mutual Insurance Company, Utica Mutual Insurance
Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.8 of
the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 1986 (Commission File No. 2-
88552)and incorporated herein by reference).+10.11
    
    Amendment No. 2 to the Restated Management Agreement dated as of December 30, 1988, by and among Pacific Mutual
Marine Office, Inc. and Arkwright Mutual Insurance Company, Lumber Mutual Insurance Company, Utica Mutual
Insurance Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit
10.8.2 of the Registrants Current Report on Form 8-K, dated January 6, 1989 (Commission File No. 2-88552) and
incorporated herein by reference).+10.12
    
    Amendment to Restated Management Agreement dated as of December 31, 1990, by and among Pacific Mutual Marine
Office, Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance Company, the Registrant and
Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.8.3. of the Registrants Annual
Report on Form 10-K for the fiscal year ended December 31, 1992 (Commission File No. 1-11238) and incorporated
herein by reference).+10.13
    
    1991 Stock Option Plan (Filed as Exhibit A to the Registrants Proxy Statement for its 1991 Annual Meeting of
Shareholders (Commission File No. 1-11238) and incorporated herein by reference).10.14
    
    Form of Indemnification Agreement (Filed as Exhibit 10.10 of the Registrants Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 (Commission File No. 1-11238) and incorporated herein by reference).+10.15
    
    1999 NYMAGIC, INC. Phantom Stock Plan (Filed as Exhibit 10.11 of the Registrants Annual Report on Form 10-K for
the fiscal year ended December 31, 1999 (Commission File No. 1-11238) and incorporated herein by reference).+10.16
    
    Severance Agreement dated as of December 31, 2001 by and between NYMAGIC, INC. and Thomas J. Iacopelli (Filed as
Exhibit 10.2 of the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 2002
(Commission File No. 1-11238) and incorporated herein by reference).+10.17
    
    Severance Agreement dated as of July 9, 2002 by and between NYMAGIC, INC. and Paul Hart. Filed as Exhibit 10.17 of the
Registrants Annual Report on Form 10-K for the year ended December 31, 2003 (Commission File No. 1- 11238) and incorporated
herein by reference.+10.18
    
    NYMAGIC, INC. 2002 Nonqualified Stock Option Plan (Filed as Exhibit 10.2 of the Registrants Quarterly Report on Form
10-Q for the quarter ended September 30, 2002 (Commission File No. 1-11238) and incorporated herein by reference).+10.19
    
    NYMAGIC, INC. Amended and Restated
2004 Long-Term Incentive Plan (Filed as Exhibit 10.19 to the Registrants Annual
Report on Form 10-K for the year ended December 31, 2004 (Commission File No. 1-11238) and incorporated herein by
reference).+10.20
    
    NYMAGIC, INC. Employee Stock Purchase Plan (Filed as Appendix C to the Registrants Proxy Statement for its 2004 Annual
Meeting of Stockholders (Commission File No. 1-11238) and incorporated herein by reference).+10.21
    
    Forms of Election for Deferred Compensation Program (Filed as Exhibit 10.21 to the Registrants Annual Report on
Form 10-K for the year ended December 31, 2004 (Commission File No. 1-11238) and incorporated herein by
reference).10.22
    
    Voting Agreement among Mariner Partners, Inc. and certain stockholders of the Company dated as of February 20,
2002, as amended March 1, 2002 (Filed as Exhibit 99.1 to the Schedule 13D filed by Mariner Partners, Inc. and the
other reporting persons named therein on March 4, 2002 (Commission File No. 5-40907) and incorporated herein by
reference).10.23
    
    Amendment No. 2 dated as of January 27, 2003 to Voting Agreement among Mariner Partners, Inc. and certain
stockholders of the Company (Filed as Exhibit 99.2 to the Schedule 13D/A filed by Mariner Partners, Inc. and the
other reporting persons named therein on April 10, 2003 (Commission File No. 5-40907) and incorporated herein by
reference).10.24
    
    Amendment No. 3 dated as of March 12, 2003 to Voting Agreement among Mariner Partners, Inc. and certain
stockholders of the Company (Filed as Exhibit 99.3 to the Schedule 13D/A filed by Mariner Partners, Inc. and the
other reporting person named therein on April 10, 2003 (Commission File No. 5-40907) and incorporated herein by
reference).10.25
    
    Amendment No. 4 dated as of February 24, 2004 to Voting Agreement among Mariner Partners, Inc. and certain
stockholders of the Company. (Filed as Exhibit 10.22 of the Registrants Annual Report on Form 10-K for the year
ended December 31, 2003 (Commission File No. 1-11238) and incorporated herein by reference).10.26
    
    Resolutions of the Board of Directors of the Companys subsidiary, New York Marine And General Insurance Company,
adopted July 18, 2002, committing not to pay dividends to the Company without the consent of the New York State
Department of Insurance prior to July 31, 2004 (Filed as Exhibit 10.1 to the Registrants original Form 10-Q for
the quarter ended June 30, 2003 (Commission File No. 1-11238) and incorporated herein by reference).10.27
    
    Resolutions of the Board of Directors of the Companys subsidiary, Gotham Insurance Company, adopted July 18,
2002, committing not to pay dividends to the Company without the consent of the New York State Department of
Insurance prior to July 31, 2004 (Filed as Exhibit 10.2 to the Registrants original Form 10-Q for the quarter
ended June 30, 2003 (Commission File No. 1-11238) and incorporated herein by reference).
 46




---



##### Table of Contents



10.28
    
    Amended and Restated Investment Management Agreement between Mariner Partners, Inc. and NYMAGIC, Inc. and New
York Marine And General Insurance Company and Gotham Insurance Company, dated as of December 6, 2002 (Filed as
Exhibit 10.6 of the Registrants amended Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
(Commission File No. 1-11238) and incorporated herein by reference).10.29
    
    Limited Partnership Agreement of Mariner Tiptree (CDO) Fund I, L.P. dated as of May 1, 2003 (Filed as Exhibit
10.1 of the Registrants Quarterly Report on Form 10-Q for the quarter ended June 20, 2004 (Commission File No.
1-11238) and incorporated herein by reference).10.30
    
    Securities Purchase Agreement dated as of January 31, 2003 by and between NYMAGIC, Inc. and Conning Capital
Partners VI, L.P. (Filed as Exhibit 99.1 of the Registrants Current Report on Form 8-K dated January 31, 2003
(Commission File No. 1-11238) and incorporated herein by reference).10.31
    
    Registration Rights Agreement dated as of January 31, 2003 by and between NYMAGIC, Inc. and Conning Capital
Partners VI, L.P. (Filed as Exhibit 99.2 of the Registrants Current Report on Form 8-K dated January 31, 2003
(Commission File No. 1-11238) and incorporated herein by reference).10.32
    
    Option Certificate dated as of January 31, 2003 by and between NYMAGIC, INC. and Conning Capital Partners VI,
L.P. (Filed as Exhibit 99.3 of the Registrants Current Report on Form 8-K dated January 31, 2003 (Commission File
No. 1-11238) and incorporated herein by reference).10.33
    
    Registration Rights Agreement dated as of March 11, 2004 by and among NYMAGIC, INC. and Keefe, Bruyette and
Woods, Inc. and the other initial purchasers referred to therein. (Filed as Exhibit 10.31 of the Registrants
Annual Report on Form 10-K for the year ended December 31, 2003 (Commission File No. 1-11238) and incorporated
herein by reference).10.34
    
    Indenture dated as of March 11, 2004 by and between NYMAGIC, INC. and Wilmington Trust Company, as trustee
related to the Companys 6.50% Senior Notes due 2014. (Filed as Exhibit 10.32 of the Registrants Annual Report on
Form 10-K for the year ended December 31, 2003 (Commission File No. 1-11238) and incorporated herein by
reference).10.35
    
    First Supplemental Indenture dated as of March 11, 2004 by and between NYMAGIC, INC. and Wilmington Trust
Company, as trustee. (Filed as Exhibit 10.33 of the Registrants Annual Report on Form 10-K for the year ended
December 31, 2003 (Commission File No. 1-11238) and incorporated herein by reference).10.36
    
    Sublease dated as of December 12, 2002 by and between BNP Paribas and New York Marine And General Insurance
Company (Filed as Exhibit 10.20 of the Registrants Annual Report on Form 10-K for the fiscal year ended December
31, 2002 (Commission File No. 1-11238) and incorporated herein by reference).10.37
    
    Stock Purchase Agreement, dated as of January 7, 2005, by and among the Company and the sellers named therein (Filed as
Exhibit 10.1 of the Registrants Current Report on Form 8-K dated January 10, 2005 (Commission File No. 1-11238) and
incorporated herein by reference).10.38
    
    Consulting Agreement, dated as of April 6, 2005, by and between the Company and William D. Shaw, Jr. (Filed as
Exhibit 10.1 to the Registrants Current Report on Form 8-K (File No. 1-11238) filed on April 6, 2005 and incorporated herein
by reference).10.39
    
    Form of Unrestricted Share Award Agreement. (Filed as Exhibit 10.1 to the Registrants Quarterly Report on Form
10-Q for the quarter ended March 31, 2005 (Commission File No. 1-11238) and incorporated herein by reference).10.40
    
    Amended and Restated Voting Agreement dated as of October 12, 2005, by and among Mark W. Blackman, Lionshead Investments,
LLC, Robert G. Simses, and Mariner Partners, Inc. (Filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K (File
No. 1-11238) filed on October 14, 2005, and incorporated herein by reference).10.41
    
    Sale and Purchase Agreement dated August 31, 2005 by and among the Robertson Group Limited and the Edinburgh Woollen Mill
(Group) Limited and MMO EU Limited. (Filed as Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 2005 (Commission File No. 1-11238) and incorporated herein by reference).10.42
    
    Taxation Deed. (Filed as Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the quarter ended September
30, 2005 (Commission File No. 1-11238) and incorporated herein by reference).10.43
    
    Form of Restricted Share Award Agreement . (Filed as Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q for
the quarter ended September 30, 2005 (Commission File No. 1-11238) and incorporated herein by reference).10.44
    
    Summary of Executive Compensation Arrangements (Filed as Item 1.01 to the Registrants Current Reports on Form 8-K (File
No. 1-11238) filed on September 20, 2005 and incorporated herein by reference).*21.1
    
    Subsidiaries of the Registrant.*23.1
    
    Consent of KPMG LLP.*31.1
    
    Certification of A. George Kallop, President and Chief Executive Officer, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Thomas J. Iacopelli, Chief Financial Officer, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002.
 47




---



##### Table of Contents



*32.1
    
    Certification of A. George Kallop, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Thomas J. Iacopelli, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.+
    
    Represents a management contract or compensatory plan or arrangement. 48




---



##### Table of Contents



SIGNATURES
  NYMAGIC, INC.(Registrant)By:
    /s/ A. George KallopA. George KallopPresident and Chief Executive Officer   Name
    
    Title
    
    Date/s/ John R. Anderson

John R. Anderson
    
    Director
    
    March 14, 2006/s/ Glenn J. Angiolillo

Glenn J. Angiolillo
    
    Director
    
    March 14, 2006/s/ John T. Baily

John T. Baily
    
    Director
    
    March 14, 2006/s/ David E. Hoffman

David E. Hoffman
    
    Director
    
    March 14, 2006/s/ A. George Kallop

A. George Kallop
    
    Director and President and
Chief Executive Officer
    
    March 14, 2006/s/ William J. Michaelcheck

William J. Michaelcheck
    
    Director
    
    March 14, 2006/s/ William D. Shaw, Jr.

William D. Shaw, Jr.
    
    Director
    
    March 14, 2006/s/ Robert G. Simses

Robert G. Simses
    
    Director
    
    March 14, 2006/s/ George R. Trumbull, III

George R. Trumbull, III
    
    Director and Chairman
    
    March 14, 2006/s/ Glenn R. Yanoff

Glenn R. Yanoff
    
    Director
    
    March 14, 2006/s/ David W. Young

David W. Young
    
    Director
    
    March 14, 2006/s/ Thomas J. Iacopelli

Thomas J. Iacopelli
    
    Principal Accounting Officer
and Chief Financial Officer
    
    March 14, 2006
 49




---



##### Table of Contents



NYMAGIC, INC.
 
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Managements Report on Internal Control Over Financial Reporting
    
    
    F-2Report of Independent Registered Public Accounting Firm
    
    
    F-3Report of Independent Registered Public Accounting Firm
    
    
    F-4Consolidated Balance Sheets
    
    
    F-5Consolidated Statements of Income
    
    
    F-6Consolidated Statements of Shareholders Equity
    
    
    F-7Consolidated Statements of Cash Flows
    
    
    F-8Notes to Consolidated Financial Statements
    
    
    F-9Financial Statement Schedule II
    
    
    F-31Financial Statement Schedule III
    
    
    F-33Financial Statement Schedule V
    
    
    F-34Financial Statement Schedule VI
    
    
    F-35
 F-1




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
      A. George Kallop,President and
    
    Thomas J. Iacopelli,Chief Executive Officer
    
    Chief Financial Officer
 F-2




---



##### Table of Contents



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




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Managements Report on
Internal Control Over Financial Reporting, Internal
Control-Integrated Framework
    Internal Control-Integrated Framework Internal Control-Integrated Framework
  
  F-4




---



##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004ASSETSInvestments:Fixed maturities:Available for sale at fair value
(amortized cost $250,823,908 and $111,590,805)
    
    $
    249,948,287
    
    
    $
    112,732,900Trading at
fair value (cost $129,080,354 and $17,310,386)
    
    
    128,348,213
    
    
    
    17,767,675Limited partnerships at equity
(cost $132,766,329 and $171,439,098)
    
    
    139,590,758
    
    
    
    190,477,346Short-term investments
    
    
    79,991,691
    
    
    
    298,039,167Cash
    
    
    24,525,288
    
    
    
    11,855,146Total cash and investments
    
    
    622,404,237
    
    
    
    630,872,234Accrued investment income
    
    
    2,836,252
    
    
    
    2,659,731Premiums and other receivables, net
    
    
    25,332,633
    
    
    
    42,598,519Receivable for securities sold
    
    
    53,012,108
    
    
    
    5,067,411Reinsurance receivables on unpaid losses, net
    
    
    299,647,802
    
    
    
    247,782,012Reinsurance receivables on paid losses, net
    
    
    28,039,284
    
    
    
    14,512,616Deferred policy acquisition costs
    
    
    11,991,728
    
    
    
    13,055,297Prepaid reinsurance premiums
    
    
    22,193,428
    
    
    
    21,378,157Deferred income taxes
    
    
    9,386,682
    
    
    
    7,528,757Property, improvements and equipment, net
    
    
    8,258,390
    
    
    
    5,117,609Other assets
    
    
    7,316,256
    
    
    
    6,521,354Total assets
    
    $
    1,090,418,800
    
    
    $
    997,093,697LIABILITIESUnpaid losses and loss adjustment expenses
    
    $
    588,865,149
    
    
    $
    503,261,138Reserve for unearned premiums
    
    
    83,237,991
    
    
    
    83,088,394Ceded reinsurance payable
    
    
    35,728,345
    
    
    
    25,462,841Notes payable
    
    
    100,000,000
    
    
    
    100,000,000Payable for securities purchased
    
    
    9,000,000
    
    
    
    Dividends payable
    
    
    536,520
    
    
    
    586,866Other liabilities
    
    
    33,766,669
    
    
    
    26,576,866Total liabilities
    
    
    851,134,674
    
    
    
    738,976,105SHAREHOLDERS EQUITYCommon stock
    
    
    15,415,790
    
    
    
    15,335,740Paid-in capital
    
    
    38,683,462
    
    
    
    36,781,911Accumulated other comprehensive income (loss)
    
    
    (569,153
    )
    
    
    742,364Retained earnings
    
    
    259,015,028
    
    
    
    251,418,750312,545,127
    
    
    
    304,278,765Treasury Stock, at cost, 6,647,377 and 5,554,642 shares
    
    
    (73,261,001
    )
    
    
    (46,161,173
    )Total shareholders equity
    
    
    239,284,126
    
    
    
    258,117,592Total liabilities and shareholders equity
    
    $
    1,090,418,800
    
    
    $
    997,093,697
  F-5




---



##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
 Year ended December 31,2005
    
    
    2004
    
    
    2003Revenues:Net premiums earned
    
    $
    134,557,204
    
    
    $
    116,333,254
    
    
    $
    96,393,950Net investment income
    
    
    36,059,811
    
    
    
    23,678,954
    
    
    
    22,393,704Net realized investment gains (losses)
    
    
    (805,276
    )
    
    
    677,589
    
    
    
    549,988Commission and other income
    
    
    1,532,756
    
    
    
    2,250,902
    
    
    
    1,458,007Total revenues
    
    
    171,344,495
    
    
    
    142,940,699
    
    
    
    120,795,649Expenses:Net losses and loss adjustment expenses incurred
    
    
    92,290,259
    
    
    
    66,558,048
    
    
    
    55,715,314Policy acquisition expenses
    
    
    30,491,014
    
    
    
    25,166,397
    
    
    
    19,430,211General and administrative expenses
    
    
    27,183,486
    
    
    
    23,246,665
    
    
    
    19,427,784Interest expense
    
    
    6,678,703
    
    
    
    5,352,775
    
    
    
    25,652Total expenses
    
    
    156,643,462
    
    
    
    120,323,885
    
    
    
    94,598,961Income before income taxes
    
    
    14,701,033
    
    
    
    22,616,814
    
    
    
    26,196,688Income tax provision:Current
    
    
    6,151,878
    
    
    
    3,835,416
    
    
    
    8,987,448Deferred
    
    
    (1,151,724
    )
    
    
    4,150,733
    
    
    
    116,476Total income tax expense
    
    
    5,000,154
    
    
    
    7,986,149
    
    
    
    9,103,924Net income
    
    $
    9,700,879
    
    
    $
    14,630,665
    
    
    $
    17,092,764Weighted average number of shares of
common stock outstanding-basic
    
    
    8,733,872
    
    
    
    9,736,490
    
    
    
    9,673,323Basic earnings per share
    
    $
    1.11
    
    
    $
    1.50
    
    
    $
    1.77Weighted average number of shares of
common stock outstanding-diluted
    
    
    8,918,190
    
    
    
    9,916,188
    
    
    
    9,827,676Diluted earnings per share
    
    $
    1.09
    
    
    $
    1.48
    
    
    $
    1.74
  F-6




---



##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Year ended December 31,2005
    
    
    2004
    
    
    2003Common stock:Balance, beginning of year
    
    $
    15,335,740
    
    
    $
    15,279,390
    
    
    $
    15,158,324Shares issued
    
    
    80,050
    
    
    
    56,350
    
    
    
    121,066Balance, end of year
    
    
    15,415,790
    
    
    
    15,335,740
    
    
    
    15,279,390Paid-in capital:Balance, beginning of year
    
    $
    36,781,911
    
    
    $
    35,476,566
    
    
    $
    30,206,370Shares issued and other
    
    
    1,901,551
    
    
    
    1,305,345
    
    
    
    5,270,196Balance, end of year
    
    
    38,683,462
    
    
    
    36,781,911
    
    
    
    35,476,566Accumulated other comprehensive income (loss):Balance, beginning of year
    
    $
    742,364
    
    
    $
    569,220
    
    
    $
    361,947Unrealized gain (loss) on securities,
net of reclassification adjustment
    
    
    (1,311,517
    )
    
    
    173,144
    
    
    
    207,273Other comprehensive income (loss)
    
    
    (1,311,517
    )
    
    
    173,144
    
    
    
    207,273Balance, end of year
    
    
    (569,153
    )
    
    
    742,364
    
    
    
    569,220Retained earnings:Balance, beginning of year
    
    $
    251,418,750
    
    
    $
    239,127,097
    
    
    $
    224,364,808Net income
    
    
    9,700,879
    
    
    
    14,630,665
    
    
    
    17,092,764Dividends declared
    
    
    (2,104,601
    )
    
    
    (2,339,012
    )
    
    
    (2,330,475
    )Balance, end of year
    
    
    259,015,028
    
    
    
    251,418,750
    
    
    
    239,127,097Treasury stock, at cost:Balance, beginning of year
    
    $
    (46,161,173
    )
    
    $
    (46,161,173
    )
    
    $
    (49,138,699
    )Net (purchase)sale of common stock
    
    
    (27,099,828
    )
    
    
    
    
    
    
    2,977,526Balance, end of year
    
    
    (73,261,001
    )
    
    
    (46,161,173
    )
    
    
    (46,161,173
    )Total Shareholders Equity
    
    
    239,284,126
    
    
    
    258,117,592
    
    
    
    244,291,100Comprehensive income:Net income
    
    $
    9,700,879
    
    
    $
    14,630,665
    
    
    $
    17,092,764Other comprehensive income (loss)
    
    
    (1,311,517
    )
    
    
    173,144
    
    
    
    207,273Comprehensive income
    
    
    8,389,362
    
    
    
    14,803,809
    
    
    
    17,300,037Number of SharesCommon stock, par value $1 each:Issued, beginning of year
    
    
    15,335,740
    
    
    
    15,279,390
    
    
    
    15,158,324Shares issued
    
    
    80,050
    
    
    
    56,350
    
    
    
    121,066Issued, end of year
    
    
    15,415,790
    
    
    
    15,335,740
    
    
    
    15,279,390Common stock, authorized shares,
par value $1 each
    
    
    30,000,000
    
    
    
    30,000,000
    
    
    
    30,000,000Common stock, shares outstanding, end of year
    
    
    8,768,413
    
    
    
    9,781,098
    
    
    
    9,724,748Dividends declared per share
    
    $
    .24
    
    
    $
    .24
    
    
    $
    .24
  F-7




---



##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    9,700,879
    
    
    $
    14,630,665
    
    
    $
    17,092,764Adjustments to reconcile net income to net cash (used in)
provided by operating activities:Provision for deferred taxes
    
    
    (1,151,724
    )
    
    
    4,150,733
    
    
    
    116,476Net realized investment (gains) losses
    
    
    805,276
    
    
    
    (677,589
    )
    
    
    (549,988
    )Equity in earnings of limited partnerships
    
    
    (17,603,357
    )
    
    
    (7,704,358
    )
    
    
    (8,548,971
    )Net bond amortization
    
    
    (268,182
    )
    
    
    1,266,282
    
    
    
    710,214Depreciation and other, net
    
    
    705,758
    
    
    
    664,681
    
    
    
    518,475Changes in:Premiums and other receivables
    
    
    17,265,886
    
    
    
    (18,616,609
    )
    
    
    11,708,218Reinsurance receivables paid and unpaid, net
    
    
    (65,392,458
    )
    
    
    18,553,934
    
    
    
    45,573,778Ceded reinsurance payable
    
    
    10,265,504
    
    
    
    (350,054
    )
    
    
    6,094,468Accrued investment income
    
    
    (176,521
    )
    
    
    (560,090
    )
    
    
    (1,707,692
    )Deferred policy acquisition costs
    
    
    1,063,569
    
    
    
    (4,809,697
    )
    
    
    (537,414
    )Prepaid reinsurance premiums
    
    
    (815,271
    )
    
    
    (472,101
    )
    
    
    (14,508,651
    )Other assets
    
    
    (794,902
    )
    
    
    (536,067
    )
    
    
    (1,141,142
    )Unpaid losses and loss adjustment expenses
    
    
    85,604,011
    
    
    
    (15,668,420
    )
    
    
    2,927,248Reserve for unearned premiums
    
    
    149,597
    
    
    
    21,267,111
    
    
    
    16,421,908Other liabilities
    
    
    7,189,803
    
    
    
    11,211,172
    
    
    
    (348,458
    )Trading portfolio activities
    
    
    (110,580,538
    )
    
    
    43,969,274
    
    
    
    (61,736,951
    )Total adjustments
    
    
    (73,733,549
    )
    
    
    51,688,202
    
    
    
    (5,008,482
    )Net cash (used in) provided by operating activities
    
    
    (64,032,670
    )
    
    
    66,318,867
    
    
    
    12,084,282Cash flows from investing activities:Fixed maturities acquired
    
    
    (247,136,021
    )
    
    
    (80,380,360
    )
    
    
    (132,310,120
    )Limited partnerships acquired
    
    
    (17,350,000
    )
    
    
    (156,400,000
    )
    
    
    (72,500,000
    )Fixed maturities sold
    
    
    97,941,993
    
    
    
    55,017,140
    
    
    
    64,840,423Net sale (purchase) of short-term investments
    
    
    219,023,303
    
    
    
    (40,975,796
    )
    
    
    99,632,096Fixed maturities matured
    
    
    8,448,000
    
    
    
    5,775,000
    
    
    
    3,820,000Equity securities sold
    
    
    
    
    
    
    
    
    
    
    4,658,759Limited partnerships sold
    
    
    85,839,946
    
    
    
    79,061,430
    
    
    
    14,091,597Receivable for securities not yet settled
    
    
    (47,944,697
    )
    
    
    (5,067,411
    )
    
    
    1,645,152Payable for securities not yet settled
    
    
    9,000,000
    
    
    
    (8,321,250
    )
    
    
    8,321,250Acquisition of property & equipment, net
    
    
    (3,846,538
    )
    
    
    (1,844,687
    )
    
    
    (3,724,672
    )Net cash (used in) provided by investing activities
    
    
    103,975,986
    
    
    
    (153,135,934
    )
    
    
    (11,525,515
    )Cash flows from financing activities:Proceeds from stock issuance and other
    
    
    1,981,601
    
    
    
    1,361,695
    
    
    
    2,176,507Cash dividends paid to stockholders
    
    
    (2,154,947
    )
    
    
    (2,335,451
    )
    
    
    (1,747,170
    )Net sale of treasury shares
    
    
    (27,099,828
    )
    
    
    
    
    
    
    6,192,281Proceeds from borrowings
    
    
    
    
    
    
    97,705,428
    
    
    
    Loan principal payments
    
    
    
    
    
    
    
    
    
    
    (6,219,953
    )Net cash (used in) provided by financing activities
    
    
    (27,273,174
    )
    
    
    96,731,672
    
    
    
    401,665Net increase in cash
    
    
    12,670,142
    
    
    
    9,914,605
    
    
    
    960,432Cash at beginning of year
    
    
    11,855,146
    
    
    
    1,940,541
    
    
    
    980,109Cash at end of year
    
    $
    24,525,288
    
    
    $
    11,855,146
    
    
    $
    1,940,541
  F-8




---



##### Table of Contents



NYMAGIC, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Summary Of Significant Accounting Policies:
 Nature of operations
      Basis of reporting
   F-9




---



##### Table of Contents



Consolidation
  Investments
      Derivatives
  Premium and policy acquisition cost recognition
  Revenue recognition
  F-10




---



##### Table of Contents



Reinsurance
    Depreciation
  Income taxes
  Fair values of financial instruments
  Incurred losses
  Debt issuance costs
  Stock options
  F-11




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003(in thousands except per share data)Net income, as reported
    
    $
    9,701
    
    
    $
    14,631
    
    
    $
    17,093Add: Stock-based employee
compensation expense included in
reported net income, net of related
tax effects
    
    
    26
    
    
    
    30
    
    
    
    19Deduct: Total stock-based employee
compensation expense determined
under the fair value base method for all
awards, net of related tax effects
    
    
    (336
    )
    
    
    (354
    )
    
    
    (358
    )Pro forma net income
    
    $
    9,391
    
    
    $
    14,307
    
    
    $
    16,754Earnings per share:Basic EPS  as reported
    
    $
    1.11
    
    
    $
    1.50
    
    
    $
    1.77Basic EPS  pro forma
    
    $
    1.08
    
    
    $
    1.47
    
    
    $
    1.73Diluted EPS  as reported
    
    $
    1.09
    
    
    $
    1.48
    
    
    $
    1.74Diluted EPS  pro forma
    
    $
    1.05
    
    
    $
    1.44
    
    
    $
    1.70
 Basic and diluted earnings per share
  Reclassification
  Effects of recent accounting pronouncements
  F-12




---



##### Table of Contents



Accounting for Stock-Based
Compensation
   (2) Investments:
  December 31, 2005
    
    Percent
    
    December 31, 2004
    
    PercentFixed Maturities Available for Sale (Fair Value):U.S. Treasury Securities
    
    $
    10,391,615
    
    
    
    1.67
    %
    
    $
    10,018,470
    
    
    
    1.59
    %Municipalities
    
    
    7,804,938
    
    
    
    1.25
    %
    
    
    7,652,500
    
    
    
    1.21
    %Corporate Bonds
    
    
    231,751,734
    
    
    
    37.24
    %
    
    
    95,061,930
    
    
    
    15.07
    %Subtotal
    
    $
    249,948,287
    
    
    
    40.16
    %
    
    $
    112,732,900
    
    
    
    17.87
    %Trading Securities (Fair Value)Collateralized Debt Obligations
    
    
    128,348,213
    
    
    
    20.62
    %
    
    
    17,767,675
    
    
    
    2.82
    %Total Fixed Maturities and Trading Portfolio
    
    $
    378,296,500
    
    
    
    60.78
    %
    
    $
    130,500,575
    
    
    
    20.69
    %Cash & Short-term Investments (at Cost)
    
    
    104,516,979
    
    
    
    16.79
    %
    
    
    309,894,313
    
    
    
    49.12
    %Total Fixed Maturities, Cash and Short-term Investments
    
    $
    482,813,479
    
    
    
    77.57
    %
    
    $
    440,394,888
    
    
    
    69.81
    %Limited Partnership Hedge Funds (at Equity)
    
    
    139,590,758
    
    
    
    22.43
    %
    
    
    190,477,346
    
    
    
    30.19
    %Total Investment Portfolio
    
    $
    622,404,237
    
    
    
    100.00
    %
    
    $
    630,872,234
    
    
    
    100.00
    %
 F-13




---



##### Table of Contents



2005Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Faircost
    
    Gains
    
    Losses
    
    ValueFixed maturities available for sale:U.S. Treasury Securities
    
    $
    10,539,941
    
    
    $
    3,831
    
    
    $
    (152,157
    )
    
    $
    10,391,615Municipalities
    
    
    7,798,992
    
    
    
    8,520
    
    
    
    (2,575
    )
    
    
    7,804,937Corporate Bonds
    
    
    232,484,975
    
    
    
    248,698
    
    
    
    (981,938
    )
    
    
    231,751,735Totals
    
    $
    250,823,908
    
    
    $
    261,049
    
    
    $
    (1,136,670
    )
    
    $
    249,948,287
 2004Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Faircost
    
    Gains
    
    Losses
    
    ValueFixed maturities available for sale:U.S. Treasury Securities
    
    $
    9,982,560
    
    
    $
    104,633
    
    
    $
    (68,723
    )
    
    $
    10,018,470Municipalities
    
    
    7,636,491
    
    
    
    16,009
    
    
    
    
    
    
    
    7,652,500Corporate Bonds
    
    
    93,971,754
    
    
    
    1,439,890
    
    
    
    (349,714
    )
    
    
    95,061,930Totals
    
    $
    111,590,805
    
    
    $
    1,560,532
    
    
    $
    (418,437
    )
    
    $
    112,732,900
  2005Description of Securities
    
    Less than 12 months
    
    
    12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    LossU.S. Treasury Securities
    
    $
    484,063
    
    
    $
    (8,337
    )
    
    $
    4,013,369
    
    
    $
    (143,820
    )
    
    $
    4,497,432
    
    
    $
    (152,157
    )Municipal Bonds
    
    
    261,928
    
    
    
    (2,575
    )
    
    
    
    
    
    
    
    
    
    
    261,928
    
    
    
    (2,575
    )Corporate Bonds
    
    
    114,416,197
    
    
    
    (695,363
    )
    
    
    11,913,819
    
    
    
    (286,575
    )
    
    
    126,330,016
    
    
    
    (981,938
    )Total temporary impaired
securities
    
    $
    115,162,188
    
    
    $
    (706,275
    )
    
    $
    15,927,188
    
    
    $
    (430,395
    )
    
    $
    131,089,376
    
    
    $
    (1,136,670
    )
 F-14




---



##### Table of Contents



Fixed maturities available for saleAmortized
    
    
    FairCost
    
    
    ValueDue in one year or less
    
    $
    18,671,256
    
    
    $
    18,594,349Due after one year through five years
    
    
    40,966,803
    
    
    
    40,476,629Due after five years through ten years
    
    
    8,517,161
    
    
    
    8,133,995Due after ten years
    
    
    8,033,929
    
    
    
    8,046,98076,189,149
    
    
    
    75,251,953Mortgage backed securities
    
    
    174,634,759
    
    
    
    174,696,334Totals
    
    $
    250,823,908
    
    
    $
    249,948,287
    Year ended December 31,2005
    
    2004
    
    2003Realized gains (losses) on investmentsFixed maturities
    
    $
    (559,952
    )
    
    $
    673,374
    
    
    $
    (267,923
    )Equity securities
    
    
    
    
    
    
    
    
    
    
    (69,900
    )Short-term investments
    
    
    (245,324
    )
    
    
    4,215
    
    
    
    887,811Net realized investment gains (losses)
    
    
    (805,276
    )
    
    
    677,589
    
    
    
    549,988Less: applicable income taxes
    
    
    281,847
    
    
    
    (237,156
    )
    
    
    (192,496
    )Net realized
investment gains (losses) after taxes
    
    $
    (523,429
    )
    
    $
    440,433
    
    
    $
    357,492
 F-15




---



##### Table of Contents



Year ended December 31,2005
    
    2004
    
    2003Change in unrealized investment appreciation
(depreciation) of securities:Fixed maturities
    
    $
    (2,017,718
    )
    
    $
    266,375
    
    
    $
    318,878Net
unrealized investment gains (losses)
    
    
    (2,017,718
    )
    
    
    266,375
    
    
    
    318,878Less: applicable deferred income taxes
    
    
    706,201
    
    
    
    (93,231
    )
    
    
    (111,605
    )Net
unrealized investment gains (losses) after taxes
    
    $
    (1,311,517
    )
    
    $
    173,144
    
    
    $
    207,273
  Year ended December 31,2005
    
    2004
    
    2003Fixed maturities available for sale
    
    $
    7,796,371
    
    
    $
    4,375,898
    
    
    $
    4,176,273Trading securities
    
    
    8,486,160
    
    
    
    13,420,243
    
    
    
    12,909,671Short-term investments
    
    
    6,161,702
    
    
    
    2,999,993
    
    
    
    1,879,098Equity in earnings of limited partnerships
    
    
    17,603,357
    
    
    
    7,704,357
    
    
    
    8,548,971Total investment income
    
    
    40,047,590
    
    
    
    28,500,491
    
    
    
    27,514,013Investment expenses
    
    
    (3,987,779
    )
    
    
    (4,821,537
    )
    
    
    (5,120,309
    )Net investment income
    
    $
    36,059,811
    
    
    $
    23,678,954
    
    
    $
    22,393,704
   Amount
    
    
    Ownership %Amici Qualified Associates, LP
    
    $
    6,732,363
    
    
    
    1.82Artesian Credit Arbitrage Total Return Fund
    
    
    9,248,906
    
    
    
    5.18Asuka Japanese Equity Long/Short Fund LP
    
    
    6,820,971
    
    
    
    6.56Blue Harbour Strategic Value Partners, LP
    
    
    5,266,170
    
    
    
    2.58Boldwater Credit Opportunities Fund I, LP
    
    
    4,135,375
    
    
    
    8.67Caspian Capital Partners, LP(1)
    
    
    8,260,304
    
    
    
    2.31Dolphin Limited Partnership  A
    
    
    6,839,837
    
    
    
    5.61Mariner Voyager LP(1)
    
    
    6,334,188
    
    
    
    13.06Midway Market Neutral Fund LLC
    
    
    7,653,992
    
    
    
    5.75Mariner Opportunities Fund (1)
    
    
    3,822,309
    
    
    
    2.43MV Partners Fund I, LP  Tranche B
    
    
    1,902,848
    
    
    
    2.01Newsmith Credit Fund, LP
    
    
    9,409,202
    
    
    
    12.73Nippon Partners, LP
    
    
    4,437,236
    
    
    
    2.59Parkcentral Global, LP
    
    
    5,270,459
    
    
    
    1.18P.A.W. Partners, LP
    
    
    9,235,485
    
    
    
    4.46Relative Value International Fund, LP
    
    
    4,516,953
    
    
    
    6.48SLS Investors
    
    
    8,418,939
    
    
    
    1.64RH Capital Associates Number One, LP
    
    
    7,561,216
    
    
    
    3.33Triage Capital Management, LP
    
    
    8,370,085
    
    
    
    6.20Wexford Spectrum Fund I, LP
    
    
    15,353,920
    
    
    
    2.09Total limited partnership hedge funds
    
    $
    139,590,758
 
 (1)
    
    Limited partnership hedge fund directly managed by Mariner.  F-16




---



##### Table of Contents



(3) Fiduciary Funds:
  F-17




---



##### Table of Contents



(Unaudited)2005
    
    2004Cash and short-term investments
    
    $
    5,870,875
    
    
    $
    21,238,135Premiums receivable
    
    
    23,804,464
    
    
    
    28,929,441Reinsurance and other receivables
    
    
    68,394,368
    
    
    
    48,902,946Total assets
    
    $
    98,069,707
    
    
    $
    99,070,522Due to insurance pool members
    
    
    34,436,135
    
    
    
    46,349,940Reinsurance payable
    
    
    35,660,965
    
    
    
    26,000,228Funds withheld from reinsurers
    
    
    25,845,670
    
    
    
    24,590,399Other liabilities
    
    
    2,126,937
    
    
    
    2,129,955Total liabilities
    
    $
    98,069,707
    
    
    $
    99,070,522
  (4) Insurance Operations:
         Reinsurer
    
    Amounts
    
    
    A.M. Best Rating(in millions)Lloyds Syndicates
    
    $
    58.4
    
    
    A (Excellent)Swiss Reinsurance America Corp.
    
    
    21.1
    
    
    A+ (Superior)Folksamerica Reinsurance Company
    
    
    13.1
    
    
    A (Excellent)Platinum Underwriters Reinsurance Co.
    
    
    8.2
    
    
    A (Excellent)Lloyds (Equitas)
    
    
    8.1
    
    
    NR-3 (Rating Procedure Inapplicable)GE Reinsurance Corp.
    
    
    7.8
    
    
    A (Excellent)FM Global (Arkwright)
    
    
    7.5
    
    
    A+ (Superior)XL Reinsurance America Inc.
    
    
    6.9
    
    
    A+ (Superior)Liberty Mutual Insurance Company
    
    
    4.6
    
    
    A (Excellent)Berkley Insurance Company
    
    
    4.2
    
    
    A (Excellent)Everest Reinsurance
    
    
    4.1
    
    
    A+ (Superior)Total
    
    $
    144.0
 F-18




---



##### Table of Contents



Gross
    
    Ceded
    
    Assumed
    
    
    
    
    
    Percentage(direct)
    
    to other
    
    from other
    
    
    
    
    
    of assumedYear ended
    
    amount
    
    companies
    
    companies
    
    Net amount
    
    to netDecember 31, 2005
    
    $
    186,734,330
    
    
    $
    66,478,291
    
    
    $
    13,635,490
    
    
    $
    133,891,529
    
    
    
    10
    %December 31, 2004
    
    
    159,407,233
    
    
    
    46,505,810
    
    
    
    24,226,839
    
    
    
    137,128,262
    
    
    
    18
    %December 31, 2003
    
    
    123,520,550
    
    
    
    44,889,948
    
    
    
    19,676,603
    
    
    
    98,307,205
    
    
    
    20
    %
  Gross
    
    Ceded
    
    Assumed
    
    
    
    
    
    Percentage(direct)
    
    to other
    
    from other
    
    
    
    
    
    of assumedYear ended
    
    amount
    
    companies
    
    companies
    
    Net amount
    
    to netDecember 31, 2005
    
    $
    178,807,549
    
    
    $
    65,663,023
    
    
    $
    21,412,678
    
    
    $
    134,557,204
    
    
    
    16
    %December 31, 2004
    
    
    142,738,099
    
    
    
    46,033,709
    
    
    
    19,628,864
    
    
    
    116,333,254
    
    
    
    17
    %December 31, 2003
    
    
    111,876,648
    
    
    
    30,381,297
    
    
    
    14,898,599
    
    
    
    96,393,950
    
    
    
    15
    %
  Unpaid losses
  F-19




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Net liability for losses and loss adjustment
expenses at beginning of year
    
    $
    255,479
    
    
    $
    242,311
    
    
    $
    208,979Provision for losses and loss adjustment
expenses occurring in current year
    
    
    105,537
    
    
    
    81,518
    
    
    
    57,125Increase (decrease) in estimated losses and loss
adjustment expenses for claims occurring
in prior years(1)
    
    
    (13,247
    )
    
    
    (14,960
    )
    
    
    (1,410
    )Net loss and loss adjustment expenses
incurred
    
    
    92,290
    
    
    
    66,558
    
    
    
    55,715Less:Losses and loss adjustment expense payments
for claims occurring during:Current year
    
    
    15,453
    
    
    
    10,287
    
    
    
    5,241Prior years
    
    
    43,099
    
    
    
    43,103
    
    
    
    17,14258,552
    
    
    
    53,390
    
    
    
    22,383Net liability for losses and loss adjustment
expenses at year end
    
    
    289,217
    
    
    
    255,479
    
    
    
    242,311Ceded unpaid losses and loss adjustment
expenses at year end
    
    
    299,648
    
    
    
    247,782
    
    
    
    276,619Gross unpaid losses and loss adjustment
expenses at year end
    
    $
    588,865
    
    
    $
    503,261
    
    
    $
    518,930
 
 (1)
    
    The adjustment to the consolidated liability for losses and
loss adjustment expenses for losses occurring in prior years
reflects the net effect of the resolution of losses for other than
full reserve value and subsequent readjustments of loss values.The $13 million decrease in 2005 primarily reflected favorable
development in the ocean marine line of business, particularly in
the 2001-2003 accident years. Although the Companys net loss
retention increased substantially in the ocean marine line during
the 2001-2003 years from previous years, the actual loss emergence
is developing less than previously anticipated. The other
liability line also reported favorable development in years prior
to 2002 resulting from a lower than expected emergence of losses
attributable to a shorter loss reporting tail than originally
estimated. While the business written in the other liability line
of business changed substantially in 2002, if similar trends appear
in subsequent periods for accident years 2002 and subsequent, there
may be additional favorable development to report for those
periods. However, we cannot be assured that such favorable trends
will continue. Further contributing to the increase was favorable
development of aircraft loss reserves largely attributable to the
2001 accident year. The favorable loss development in 2005 was
partially offset by net adverse loss development resulting from
provisions made for insolvent, financially impaired reinsurers and
commuted reinsurance contracts, partly as a result of an increase
in ceded incurred losses relating to a few specific asbestos
claims.The $15 million decrease in 2004 reflects favorable loss
development in the aviation line, mainly in reserve adjustments of
$8.3 million for the terrorist attacks of September 11, 2001 on the
Pentagon and the hijacked airliner that crashed in Pennsylvania,
and in the ocean marine line of business due to a lower than
expected emergence of losses in the 1998-2001 accident years.The decrease in 2003 of $1.4 million reflects favorable loss
development arising from the ocean marine line of business,
partially offset by adverse development in the aviation line for
accident years 1997-2000.  F-20




---



##### Table of Contents



Salvage and subrogation
  Deferred policy acquisition costs
  (5) Property, Improvements and Equipment, Net:
  2005
    
    2004Office furniture and equipment
    
    $
    1,687,560
    
    
    $
    1,335,844Computer equipment
    
    
    699,545
    
    
    
    500,139Computer software
    
    
    4,574,128
    
    
    
    2,482,235Leasehold improvements
    
    
    3,433,622
    
    
    
    2,254,78710,394,855
    
    
    
    6,573,005Less: accumulated depreciation and amortization
    
    
    (2,136,465
    )
    
    
    (1,455,396
    )Property, improvements and equipment, net
    
    $
    8,258,390
    
    
    $
    5,117,609
  (6) Income Taxes:
  F-21




---



##### Table of Contents



December 31, 2005
    
    December 31, 2004Deferred Tax Assets:Loss reserves
    
    $
    14,170,491
    
    
    $
    12,808,891Unearned premiums
    
    
    4,273,119
    
    
    
    4,319,717State and local tax loss carryforwards
    
    
    3,612,526
    
    
    
    3,286,180Bad debt reserve
    
    
    887,427
    
    
    
    182,972Unrealized depreciation of investments
    
    
    306,467
    
    
    
    Other
    
    
    654,456
    
    
    
    271,849Deferred tax assets
    
    
    23,904,486
    
    
    
    20,869,609Less: Valuation allowance
    
    
    4,176,558
    
    
    
    3,790,355Total deferred tax assets
    
    
    19,727,928
    
    
    
    17,079,254Deferred Tax Liabilities:Deferred policy acquisition costs
    
    
    4,197,105
    
    
    
    4,569,354Unrealized appreciation of investments
    
    
    
    
    
    
    399,734Deferred investment income
    
    
    5,197,737
    
    
    
    3,780,199Accrued salvage and subrogation
    
    
    291,899
    
    
    
    296,773Other
    
    
    654,505
    
    
    
    504,437Total deferred tax liabilities
    
    
    10,341,246
    
    
    
    9,550,497Net deferred tax assets
    
    $
    9,386,682
    
    
    $
    7,528,757
   December 31, 2005
    
    December 31, 2004
    
    December 31, 2003Balance, beginning of year
    
    $
    3,790,355
    
    
    $
    3,495,116
    
    
    $
    2,363,081Change in valuation allowance
    
    
    386,203
    
    
    
    295,239
    
    
    
    1,132,035Balance, end of period
    
    $
    4,176,558
    
    
    $
    3,790,355
    
    
    $
    3,495,116
    Year ended December 31,2005
    
    2004
    
    2003Income taxes at the Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Tax exempt interest
    
    
    (0.5
    )
    
    
    (0.2
    )
    
    
    (0.3
    )Valuation allowance
    
    
    2.6
    
    
    
    1.3
    
    
    
    4.3State taxes
    
    
    (2.0
    )
    
    
    (0.9
    )
    
    
    (2.4
    )Other, net
    
    
    (1.1
    )
    
    
    0.1
    
    
    
    (1.8
    )Income tax provisions
    
    
    34.0
    %
    
    
    35.3
    %
    
    
    34.8
    %
   F-22




---



##### Table of Contents



(7) Statutory Income and Surplus:
   Combined
    
    
    Combined
    
    
    DividendsStatutory
    
    
    Statutory
    
    
    DeclaredYear ended
    
    Net Income
    
    
    Surplus
    
    
    To ParentDecember 31, 2005
    
    $
    5,679,000
    
    
    $
    186,848,000
    
    
    $
    8,500,000December 31, 2004
    
    $
    5,363,000
    
    
    $
    181,633,000
    
    
    $
    15,500,000December 31, 2003
    
    $
    13,689,000
    
    
    $
    186,325,000
    
    
    $
    9,575,000
  (8) Employee Retirement Plans:
  (9) Debt:
    F-23




---



##### Table of Contents



(10) Commitments:
   Amount2006
    
    
    1,763,9072007
    
    
    1,745,2192008
    
    
    1,761,5942009
    
    
    1,784,5192010
    
    
    1,763,722Thereafter
    
    
    9,842,084Total
    
    $
    18,661,045
    (11) Comprehensive Income:
  Year ended December 31,2005
    
    2004
    
    2003Net income
    
    $
    9,700,879
    
    
    $
    14,630,665
    
    
    $
    17,092,764Other comprehensive income (loss), net of tax:Unrealized holding gains (losses) on securities,
net of deferred tax benefit (expense) of
$988,048, $(330,387) and $(304,104)
    
    
    (1,834,946
    )
    
    
    613,577
    
    
    
    564,765Less: reclassification adjustment for gains (losses) realized
in net income, net of tax benefit (expense)
of $281,847, $(237,156) and $(192,496)
    
    
    (523,429
    )
    
    
    440,433
    
    
    
    357,492Other comprehensive income (loss)
    
    
    (1,311,517
    )
    
    
    173,144
    
    
    
    207,273Total comprehensive income
    
    $
    8,389,362
    
    
    $
    14,803,809
    
    
    $
    17,300,037
 F-24




---



##### Table of Contents



(12) Common Stock Repurchase Plan and Shareholders Equity:
     December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003Weighted
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageNet
    
    
    Shares
    
    
    Per
    
    
    Net
    
    
    Shares
    
    
    Per
    
    
    Net
    
    
    Shares
    
    
    PerIncome
    
    
    Outstanding
    
    
    Share
    
    
    Income
    
    
    Outstanding
    
    
    Share
    
    
    Income
    
    
    Outstanding
    
    
    Share(In thousands except for per share data)Basic EPS
    
    $
    9,701
    
    
    
    8,734
    
    
    $
    1.11
    
    
    $
    14,631
    
    
    
    9,736
    
    
    $
    1.50
    
    
    $
    17,093
    
    
    
    9,673
    
    
    $
    1.77Effect of
Dilutive Securities:Stock Options
    
    
    
    
    
    
    184
    
    
    $
    (.02
    )
    
    
    
    
    
    
    180
    
    
    $
    (.02
    )
    
    
    
    
    
    
    155
    
    
    $
    (.03
    )Diluted EPS
    
    $
    9,701
    
    
    
    8,918
    
    
    $
    1.09
    
    
    $
    14,631
    
    
    
    9,916
    
    
    $
    1.48
    
    
    $
    17,093
    
    
    
    9,828
    
    
    $
    1.74
 (13) Stock Plans:
  F-25




---



##### Table of Contents



December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003Number
    
    
    Option
    
    
    Number
    
    
    Option
    
    
    Number
    
    
    OptionShares Under
    
    of
    
    
    Price
    
    
    of
    
    
    Price
    
    
    of
    
    
    PriceOption
    
    Shares
    
    
    Per Share
    
    
    Shares
    
    
    Per Share
    
    
    Shares
    
    
    Per ShareOutstanding,
beginning of year
    
    
    468,500
    
    
    $
    12.59$26.00
    
    
    
    520,700
    
    
    $
    12.59$20.25
    
    
    
    622,568
    
    
    $
    12.05$20.25Granted
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    $
    26.00
    
    
    
    20,000
    
    
    $
    18.69Exercised
    
    
    (59,050
    )
    
    $
    14.47$15.79
    
    
    
    (42,250
    )
    
    $
    14.47$15.79
    
    
    
    (121,066
    )
    
    $
    12.05$17.22Forfeited
    
    
    (1,600
    )
    
    $
    14.47
    
    
    
    (19,950
    )
    
    $
    14.47$15.56
    
    
    
    (802
    )
    
    $
    12.05$14.47Outstanding,
end of year
    
    
    407,850
    
    
    $
    12.59$26.00
    
    
    
    468,500
    
    
    $
    12.59$26.00
    
    
    
    520,700
    
    
    $
    12.59$20.25Exercisable,
end of year
    
    
    285,100
    
    
    $
    12.59$26.00
    
    
    
    226,175
    
    
    $
    12.59$20.25
    
    
    
    156,550
    
    
    $
    12.59$20.25
   F-26




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003(in thousands except per share data)Net income, as reported
    
    $
    9,701
    
    
    $
    14,631
    
    
    $
    17,093Add: Stock-based employee
compensation expense included in
reported net income, net of related
tax effects
    
    
    26
    
    
    
    30
    
    
    
    19Deduct: Total stock-based employee
compensation expense determined
under the fair value base method for all
awards, net of related tax effects
    
    
    (336
    )
    
    
    (354
    )
    
    
    (358
    )Pro forma net income
    
    $
    9,391
    
    
    $
    14,307
    
    
    $
    16,754Earnings per share:Basic EPS  as reported
    
    $
    1.11
    
    
    $
    1.50
    
    
    $
    1.77Basic EPS  pro forma
    
    $
    1.08
    
    
    $
    1.47
    
    
    $
    1.73Diluted EPS  as reported
    
    $
    1.09
    
    
    $
    1.48
    
    
    $
    1.74Diluted EPS  pro forma
    
    $
    1.05
    
    
    $
    1.44
    
    
    $
    1.70
     (14) Segment Information:
   F-27




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003Segments
    
    (in thousands)Income
    
    
    
    
    
    
    Income
    
    
    
    
    
    
    IncomeRevenues
    
    
    (Loss)
    
    
    Revenues
    
    
    (Loss)
    
    
    Revenues
    
    
    (Loss)Ocean marine
    
    $
    72,326
    
    
    $
    8,491
    
    
    $
    76,779
    
    
    $
    11,912
    
    
    $
    73,371
    
    
    $
    19,372Inland marine/Fire
    
    
    7,295
    
    
    
    1,454
    
    
    
    4,891
    
    
    
    1,901
    
    
    
    3,802
    
    
    
    282Other liability
    
    
    55,277
    
    
    
    815
    
    
    
    35,056
    
    
    
    (916
    )
    
    
    16,126
    
    
    
    (1,116
    )Aircraft
    
    
    857
    
    
    
    2,214
    
    
    
    68
    
    
    
    12,173
    
    
    
    2,865
    
    
    
    2,481Subtotal
    
    
    135,755
    
    
    
    12,974
    
    
    
    116,794
    
    
    
    25,070
    
    
    
    96,164
    
    
    
    21,019Other income
    
    
    334
    
    
    
    334
    
    
    
    1,790
    
    
    
    1,790
    
    
    
    1,688
    
    
    
    1,688Net investment income
    
    
    36,060
    
    
    
    36,060
    
    
    
    23,679
    
    
    
    23,679
    
    
    
    22,394
    
    
    
    22,394Net realized investment gains (losses)
    
    
    (805
    )
    
    
    (805
    )
    
    
    678
    
    
    
    678
    
    
    
    550
    
    
    
    550General and administrative expenses
    
    
    
    
    
    
    (27,183
    )
    
    
    
    
    
    
    (23,247
    )
    
    
    
    
    
    
    (19,428
    )Interest expense
    
    
    
    
    
    
    (6,679
    )
    
    
    
    
    
    
    (5,353
    )
    
    
    
    
    
    
    (26
    )Income tax expense
    
    
    
    
    
    
    (5,000
    )
    
    
    
    
    
    
    (7,986
    )
    
    
    
    
    
    
    (9,104
    )Total
    
    $
    171,344
    
    
    $
    9,701
    
    
    $
    142,941
    
    
    $
    14,631
    
    
    $
    120,796
    
    
    $
    17,093
  2005
    
    
    2004
    
    
    2003(in thousands)United States
    
    $
    185,161
    
    
    $
    165,388
    
    
    $
    119,749Europe
    
    
    9,853
    
    
    
    12,489
    
    
    
    16,836Asia
    
    
    2,931
    
    
    
    2,430
    
    
    
    3,994Latin America
    
    
    879
    
    
    
    991
    
    
    
    1,203Other
    
    
    1,546
    
    
    
    2,336
    
    
    
    1,415Total Gross Written Premiums
    
    $
    200,370
    
    
    $
    183,634
    
    
    $
    143,197
 F-28




---



##### Table of Contents



(15) Quarterly Financial Data (unaudited):
  Three Months EndedMarch 31,
    
    June 30,
    
    Sept. 30,
    
    Dec. 31,2005
    
    2005
    
    2005
    
    2005(in thousands, except per share data)Total revenues
    
    $
    42,142
    
    
    $
    44,018
    
    
    $
    35,780
    
    
    $
    49,405Income (loss) before income taxes
    
    $
    5,118
    
    
    $
    7,616
    
    
    $
    (8,041
    )
    
    $
    10,007Net income (loss)
    
    $
    3,317
    
    
    $
    4,958
    
    
    $
    (5,230
    )
    
    $
    6,655Basic earnings (loss) per share
    
    $
    .38
    
    
    $
    .57
    
    
    $
    (.60
    )
    
    $
    .76Diluted earnings (loss) per share
    
    $
    .37
    
    
    $
    .56
    
    
    $
    (.60
    )
    
    $
    .74
 Three Months EndedMarch 31,
    
    June 30,
    
    Sept. 30,
    
    Dec. 31,2004
    
    2004
    
    2004
    
    2004(in thousands, except per share data)Total revenues
    
    $
    31,445
    
    
    $
    32,318
    
    
    $
    35,349
    
    
    $
    43,829Income before income taxes
    
    $
    4,257
    
    
    $
    1,314
    
    
    $
    7,724
    
    
    $
    9,322Net income
    
    $
    2,769
    
    
    $
    858
    
    
    $
    4,981
    
    
    $
    6,023Basic earnings per share
    
    $
    .28
    
    
    $
    .09
    
    
    $
    .51
    
    
    $
    .62Diluted earnings per share
    
    $
    .28
    
    
    $
    .09
    
    
    $
    .50
    
    
    $
    .61
 (16) Related Party Transactions:
     F-29




---



##### Table of Contents



(17) Legal Proceedings:
   F-30




---



##### Table of Contents



FINANCIAL STATEMENT SCHEDULES
SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NYMAGIC, INC.
Balance Sheets
 December 31,
    
    
    December 31,2005
    
    
    2004Assets:Cash
    
    $
    564,460
    
    
    $
    311,241Investments
    
    
    58,082,945
    
    
    
    113,976,557Total cash and investments
    
    
    58,647,405
    
    
    
    114,287,798Investment in subsidiaries
    
    
    226,407,073
    
    
    
    224,027,350Due from subsidiaries
    
    
    15,754,128
    
    
    
    15,093,556Receivable for securities sold
    
    
    34,735,775
    
    
    
    2,628,019Other assets
    
    
    6,068,785
    
    
    
    5,873,783Total assets
    
    $
    341,613,166
    
    
    $
    361,910,506Liabilities:Notes payable
    
    $
    100,000,000
    
    
    $
    100,000,000Dividend payable
    
    
    536,520
    
    
    
    586,866Other liabilities
    
    
    1,792,520
    
    
    
    3,206,048Total liabilities
    
    
    102,329,040
    
    
    
    103,792,914Shareholders equity:Common stock
    
    
    15,415,790
    
    
    
    15,335,740Paid-in capital
    
    
    38,683,462
    
    
    
    36,781,911Accumulated other comprehensive income (loss)
    
    
    (569,153
    )
    
    
    742,364Retained earnings
    
    
    259,015,028
    
    
    
    251,418,750Treasury stock
    
    
    (73,261,001
    )
    
    
    (46,161,173
    )Total shareholders equity
    
    
    239,284,126
    
    
    
    258,117,592Total liabilities and shareholders equity
    
    $
    341,613,166
    
    
    $
    361,910,506
 Statements of Income
 Year ended December 31,2005
    
    
    2004
    
    
    2003Revenues:Cash dividends from subsidiary
    
    $
    8,500,000
    
    
    $
    15,500,000
    
    
    $
    9,575,000Net investment and other income (loss)
    
    
    8,382,318
    
    
    
    1,785,226
    
    
    
    (2,883,359
    )16,882,318
    
    
    
    17,285,226
    
    
    
    6,691,641Expenses:General and administrative expenses
    
    
    3,090,189
    
    
    
    2,405,211
    
    
    
    1,181,117Interest expenses
    
    
    6,677,409
    
    
    
    5,351,525
    
    
    
    25,652Income tax benefit
    
    
    (494,921
    )
    
    
    (2,935,225
    )
    
    
    (1,181,099
    )9,272,677
    
    
    
    4,821,511
    
    
    
    25,670Income before equity income
    
    
    7,609,641
    
    
    
    12,463,715
    
    
    
    6,665,971Equity in undistributed earning of subsidiaries
    
    
    2,091,238
    
    
    
    2,166,950
    
    
    
    10,426,793Net income
    
    $
    9,700,879
    
    
    $
    14,630,665
    
    
    $
    17,092,764
 F-31




---



##### Table of Contents



SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NYMAGIC, INC.
Statements of Cash Flows
 Year ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    9,700,879
    
    
    $
    14,630,665
    
    
    $
    17,092,764Adjustments to net income
to cash provided by operating activities:Equity in undistributed earnings of subsidiaries
    
    
    (2,091,238
    )
    
    
    (2,166,950
    )
    
    
    (10,426,793
    )Equity in earnings of limited partnerships
    
    
    (274,038
    )
    
    
    (5,113,176
    )
    
    
    (351,000
    )Increase in other assets
    
    
    (195,005
    )
    
    
    (214,300
    )
    
    
    (316,623
    )Decrease (increase) in due from subsidiaries
    
    
    (660,571
    )
    
    
    (3,193,389
    )
    
    
    2,665,817(Decrease) increase in other liabilities
    
    
    (1,413,528
    )
    
    
    (341,229
    )
    
    
    3,357,102Net cash provided by operating activities
    
    
    5,066,499
    
    
    
    3,601,621
    
    
    
    12,021,267Cash flows from investing activities:Net sale (purchase) of other investments
    
    
    8,764,071
    
    
    
    (35,695,316
    )
    
    
    2,862,974Limited partnerships (acquired) sold
    
    
    47,403,579
    
    
    
    (62,817,059
    )
    
    
    (10,000,000
    )Receivable for securities
    
    
    (32,107,756
    )
    
    
    (2,628,019
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    24,059,894
    
    
    
    (101,140,394
    )
    
    
    (7,137,026
    )Cash flows in financing activities:Proceeds from stock issuance and other
    
    
    1,981,601
    
    
    
    1,361,695
    
    
    
    2,176,507Cash dividends paid to stockholders
    
    
    (2,154,947
    )
    
    
    (2,335,451
    )
    
    
    (1,747,170
    )Net sale of treasury shares
    
    
    (27,099,828
    )
    
    
    
    
    
    
    6,192,281Proceeds from borrowings
    
    
    
    
    
    
    97,705,428
    
    
    
    Loan principal payments
    
    
    
    
    
    
    
    
    
    
    (6,219,953
    )Investment in subsidiary
    
    
    (1,600,000
    )
    
    
    
    
    
    
    Net amount loaned to subsidiary
    
    
    
    
    
    
    
    
    
    
    (4,650,000
    )Net cash provided by (used in) financing activities
    
    
    (28,873,174
    )
    
    
    96,731,672
    
    
    
    (4,248,335
    )Net increase (decrease) in cash
    
    
    253,219
    
    
    
    (807,101
    )
    
    
    635,906Cash at beginning of period
    
    
    311,241
    
    
    
    1,118,342
    
    
    
    482,436Cash at end of period
    
    $
    564,460
    
    
    $
    311,241
    
    
    $
    1,118,342
  F-32




---



##### Table of Contents



NYMAGIC, INC.
 
 SCHEDULE III  SUPPLEMENTARY INSURANCE INFORMATION
  Column A
    
    Column B
    
    Column C
    
    Column D
    
    Column E
    
    Column FDEFERRED
    
    FUTURE POLICYPOLICY
    
    BENEFITS, LOSSES
    
    
    
    
    
    OTHER POLICYACQUISITION
    
    CLAIMS AND
    
    UNEARNED
    
    CLAIMS AND BENEFITS
    
    PREMIUMCOST
    
    LOSS EXPENSES
    
    PREMIUMS
    
    PAYABLE
    
    REVENUESEGMENTS
    
    (caption 7)
    
    (caption 13-a-1)
    
    (caption 13-a-2)
    
    (caption 13-a-3)
    
    (caption 1)2005
    
    Ocean marine
    
    
    6,488
    
    
    
    243,033
    
    
    
    39,179
    
    
    
    
    
    
    $
    71,688Inland marine/Fire
    
    
    139
    
    
    
    27,624
    
    
    
    11,182
    
    
    
    
    
    
    
    7,340Other liability
    
    
    5,365
    
    
    
    172,197
    
    
    
    32,877
    
    
    
    
    
    
    
    55,277Aircraft
    
    
    
    
    
    
    146,011
    
    
    
    
    
    
    
    
    
    
    
    252Total
    
    $
    11,992
    
    
    $
    588,865
    
    
    $
    83,238
    
    
    
    
    
    
    $
    134,5572004
    
    Ocean marine
    
    
    7,534
    
    
    
    198,655
    
    
    
    39,628
    
    
    
    
    
    
    $
    76,361Inland marine/Fire
    
    
    358
    
    
    
    21,801
    
    
    
    8,170
    
    
    
    
    
    
    
    4,919Other liability
    
    
    5,163
    
    
    
    126,023
    
    
    
    35,290
    
    
    
    
    
    
    
    35,056Aircraft
    
    
    
    
    
    
    156,782
    
    
    
    
    
    
    
    
    
    
    
    (3
    )Total
    
    $
    13,055
    
    
    $
    503,261
    
    
    $
    83,088
    
    
    
    
    
    
    $
    116,3332003
    
    Ocean marine
    
    
    5,767
    
    
    
    199,406
    
    
    
    37,829
    
    
    
    
    
    
    $
    73,096Inland marine/Fire
    
    
    195
    
    
    
    26,483
    
    
    
    7,526
    
    
    
    
    
    
    
    4,234Other liability
    
    
    2,284
    
    
    
    96,555
    
    
    
    16,462
    
    
    
    
    
    
    
    16,126Aircraft
    
    
    
    
    
    
    196,486
    
    
    
    4
    
    
    
    
    
    
    
    2,938Total
    
    $
    8,246
    
    
    $
    518,930
    
    
    $
    61,821
    
    
    
    
    
    
    $
    96,394
 Column A
    
    Column G
    
    Column H
    
    Column I
    
    Column J
    
    Column KBENEFITS,NET
    
    CLAIMS, LOSSES
    
    AMORTIZATION OFINVESTMENT
    
    AND SETTLEMENT
    
    DEFERRED
    
    OTHERINCOME
    
    EXPENSES
    
    POLICY
    
    OPERATING
    
    PREMIUMSSEGMENTS
    
    (caption 2)
    
    (caption 4)
    
    ACQUISITION COSTS
    
    EXPENSES
    
    WRITTEN2005
    
    Ocean marine
    
    
    
    
    
    $
    45,339
    
    
    $
    18,496
    
    
    
    
    
    
    $
    70,596Inland marine/Fire
    
    
    
    
    
    
    5,262
    
    
    
    579
    
    
    
    
    
    
    
    8,452Other liability
    
    
    
    
    
    
    43,068
    
    
    
    11,394
    
    
    
    
    
    
    
    54,592Aircraft
    
    
    
    
    
    
    (1,379
    )
    
    
    22
    
    
    
    
    
    
    
    252Total
    
    $
    36,060
    
    
    $
    92,290
    
    
    $
    30,491
    
    
    $
    27,183
    
    
    $
    133,8922004
    
    Ocean marine
    
    
    
    
    
    $
    47,544
    
    
    $
    17,323
    
    
    
    
    
    
    $
    82,689Inland marine/Fire
    
    
    
    
    
    
    2,360
    
    
    
    630
    
    
    
    
    
    
    
    5,255Other liability
    
    
    
    
    
    
    28,829
    
    
    
    7,143
    
    
    
    
    
    
    
    49,190Aircraft
    
    
    
    
    
    
    (12,175
    )
    
    
    70
    
    
    
    
    
    
    
    (6
    )Total
    
    $
    23,679
    
    
    $
    66,558
    
    
    $
    25,166
    
    
    $
    23,247
    
    
    $
    137,1282003
    
    Ocean marine
    
    
    
    
    
    $
    38,468
    
    
    $
    15,531
    
    
    
    
    
    
    $
    67,744Inland marine/Fire
    
    
    
    
    
    
    3,355
    
    
    
    165
    
    
    
    
    
    
    
    4,833Other liability
    
    
    
    
    
    
    13,727
    
    
    
    3,515
    
    
    
    
    
    
    
    22,961Aircraft
    
    
    
    
    
    
    165
    
    
    
    219
    
    
    
    
    
    
    
    2,769Total
    
    $
    22,394
    
    
    $
    55,715
    
    
    $
    19,430
    
    
    $
    19,428
    
    
    $
    98,307
 F-33




---



##### Table of Contents



NYMAGIC, INC.
 
 SCHEDULE V  VALUATION AND QUALIFYING ACCOUNTS
 COLUMN A
    
    COLUMN B
    
    COLUMN C
    
    COLUMN D
    
    COLUMN EDESCRIPTION
    
    Balance at
    
    
    
    
    
    
    
    
    
    Balance atbeginning
    
    
    
    
    
    
    
    
    
    close ofof period
    
    Additions
    
    Deductions
    
    periodDecember 31, 2005
Allowance for
doubtful accounts
    
    $
    12,838,007
    
    
    $
    6,639,265
    
    
    $
    (2,461,254
    )
    
    $
    17,016,018December 31, 2004
Allowance for
doubtful accounts
    
    $
    13,273,522
    
    
    $
    1,379,926
    
    
    $
    (1,815,441
    )
    
    $
    12,838,007December 31, 2003
Allowance for
doubtful accounts
    
    $
    13,725,505
    
    
    $
    1,001,825
    
    
    $
    (1,453,808
    )
    
    $
    13,273,522
  F-34




---



##### Table of Contents



NYMAGIC, INC.
 
 SCHEDULE VI  SUPPLEMENTARY INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS
 (In thousands)DEFERRED
    
    
    RESERVE FORAFFILIATION
    
    POLICY
    
    
    UNPAID CLAIMS
    
    
    
    
    
    
    UNEARNED
    
    
    NET
    
    
    NETWITH
    
    ACQUISITION
    
    
    AND CLAIMS
    
    
    
    
    
    
    PREMIUM
    
    
    EARNED
    
    
    INVESTMENTREGISTRANT
    
    COSTS
    
    
    EXPENSES
    
    
    DISCOUNT
    
    
    RESERVE
    
    
    PREMIUMS
    
    
    INCOMEDECEMBER 31, 2005CONSOLIDATED SUBSIDIARIES
    
    $
    11,992
    
    
    $
    588,865
    
    
    
    
    
    
    $
    83,238
    
    
    $
    134,557
    
    
    $
    27,893DECEMBER 31, 2004CONSOLIDATED SUBSIDIARIES
    
    
    13,055
    
    
    
    503,261
    
    
    
    
    
    
    
    83,088
    
    
    
    116,333
    
    
    
    21,894DECEMBER 31, 2003CONSOLIDATED SUBSIDIARIES
    
    
    8,246
    
    
    
    518,930
    
    
    
    
    
    
    
    61,821
    
    
    
    96,394
    
    
    
    25,558
 CLAIMS AND CLAIMSEXPENSES INCURRED
    
    
    AMORTIZATIONRELATED TO
    
    
    OF DEFERREDAFFILIATION
    
    
    
    
    
    
    
    
    
    POLICY
    
    
    PAID CLAIMSWITH
    
    CURRENT
    
    
    PRIOR
    
    
    ACQUISITION
    
    
    AND CLAIMS
    
    
    PREMIUMSREGISTRANT
    
    YEAR
    
    
    YEARS
    
    
    COSTS
    
    
    EXPENSES
    
    
    WRITTENDECEMBER 31, 2005CONSOLIDATED SUBSIDIARIES
    
    $
    105,537
    
    
    $
    (13,247
    )
    
    $
    30,491
    
    
    $
    58,552
    
    
    $
    133,892DECEMBER 31, 2004CONSOLIDATED SUBSIDIARIES
    
    
    81,518
    
    
    
    (14,960
    )
    
    
    25,166
    
    
    
    53,390
    
    
    
    137,128DECEMBER 31, 2003CONSOLIDATED SUBSIDIARIES
    
    
    57,125
    
    
    
    (1,410
    )
    
    
    19,430
    
    
    
    22,383
    
    
    
    98,307
 F-35