##### 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, 2007
 OR
 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 filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
 MARKET VALUE
  OUTSTANDING STOCK
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PAGEPART IForward-looking Statements
    
    
    iiItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    32Item 1B. Unresolved Staff Comments
    
    
    37Item 2. Properties
    
    
    37Item 3. Legal Proceedings
    
    
    37Item 4. Submission of Matters to a Vote of Security Holders
    
    
    37PART IIItem 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    37Item 6. Selected Financial Data
    
    
    39Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    40Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    54Item 8. Financial Statements and Supplementary Data
    
    
    55Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    55Item 9A. Controls and Procedures
    
    
    55Item 9B. Other Information
    
    
    56PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    56Item 11. Executive Compensation
    
    
    56Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    56Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    56Item 14. Principal Accounting Fees and Services
    
    
    56PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    57Signatures
    
    
    61Index to Consolidated Financial Statements
    
    
    F-1EX-10.57: 2004 AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN AWARD AGREEMENTEX-10.58: 2004 AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN AWARD AGREEMENTEX-10.59: EMPLOYMENT AGREEMENTEX-10.60: SEVERENCE AGREEMENTEX-10.61: LEASEEX-21.1: SUBSIDIARIES OF THE REGISTRANTEX-23.1: CONSENT OF KPMG LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  i




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FORWARD  LOOKING STATEMENTS
  ii




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##### Table of Contents



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




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The Pools
      2




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##### 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
 3




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##### Table of Contents



Petroleum and Bulk Liquid Cargo
 Inland marine/fire insurance
 Contractors Equipment
 Motor Truck Cargo
 Transit Floaters
 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
  Excess Workers Compensation
 Commercial Automobile
 Employment Practices Liability
  4




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##### Table of Contents



Aircraft insurance
   NYMAGIC Gross Premiums Written
    
    Year Ended December 31,By Segment
    
    2007
    
    2006
    
    2005(Dollars in thousands)Ocean Marine
    
    $
    98,689
    
    
    
    43
    %
    
    $
    104,876
    
    
    
    43
    %
    
    $
    105,628
    
    
    
    53
    %Inland Marine/Fire
    
    
    18,625
    
    
    
    8
    %
    
    
    21,595
    
    
    
    9
    %
    
    
    25,000
    
    
    
    12
    %Other Liability
    
    
    110,986
    
    
    
    49
    %
    
    
    114,754
    
    
    
    48
    %
    
    
    69,346
    
    
    
    35
    %Subtotal
    
    
    228,300
    
    
    
    100
    %
    
    
    241,225
    
    
    
    100
    %
    
    
    199,974
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    88
    
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    396
    
    
    
    Total
    
    $
    228,388
    
    
    
    100
    %
    
    $
    241,309
    
    
    
    100
    %
    
    $
    200,370
    
    
    
    100
    %
 NYMAGIC Net Premiums Written
    
    Year Ended December 31,By Segment
    
    2007
    
    2006
    
    2005(Dollars in thousands)Ocean Marine
    
    $
    68,192
    
    
    
    41
    %
    
    $
    75,243
    
    
    
    49
    %
    
    $
    70,596
    
    
    
    53
    %Inland Marine/Fire
    
    
    6,935
    
    
    
    4
    %
    
    
    7,097
    
    
    
    4
    %
    
    
    8,452
    
    
    
    6
    %Other Liability
    
    
    92,618
    
    
    
    55
    %
    
    
    72,231
    
    
    
    47
    %
    
    
    54,592
    
    
    
    41
    %Subtotal
    
    
    167,745
    
    
    
    100
    %
    
    
    154,571
    
    
    
    100
    %
    
    
    133,640
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    108
    
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    252
    
    
    
    Total
    
    $
    167,853
    
    
    
    100
    %
    
    $
    154,860
    
    
    
    100
    %
    
    $
    133,892
    
    
    
    100
    %
 Reinsurance Ceded
   5




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6




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Reinsurer
    
    Amounts
    
    A.M. Best Rating(in millions)Lloyds Syndicates (1)
    
    $
    61.3
    
    
    A (Excellent)Swiss Reinsurance America Corp.
    
    
    27.4
    
    
    A+ (Superior)Lloyds (Equitas) (2)
    
    
    11.5
    
    
    NR-3 (Rating Procedure Inapplicable)Platinum Underwriters Reinsurance Co.
    
    
    8.3
    
    
    A (Excellent)Folksamerica Reinsurance Company
    
    
    6.6
    
    
    A- (Excellent)XL Reinsurance America Inc.
    
    
    5.8
    
    
    A+ (Superior)Liberty Mutual Insurance Company
    
    
    5.3
    
    
    A (Excellent)Transatlantic Reins. Co.
    
    
    5.1
    
    
    A+ (Superior)FM Global (Arkwright)
    
    
    4.8
    
    
    A+ (Superior)Berkley Insurance Company
    
    
    3.8
    
    
    A+ (Superior)General Reins. Corp.
    
    
    3.7
    
    
    A++ (Superior)Axis Reins. Co.
    
    
    3.6
    
    
    A (Excellent)Everest Reinsurance
    
    
    2.6
    
    
    A+ (Superior)Munich Reinsurance America
    
    
    2.3
    
    
    A+ (Superior)Total
    
    $
    152.1
    7




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##### Table of Contents



1.
    
    As of December 31, 2007 and 2006, the Company reported total ceded reinsurance payable of
$27.1 million and $44.8 million, respectively.2.
    
    As of December 31, 2007 and 2006, the Company reported total reinsurance receivables on paid
losses of $38.8 million and $47.5 million, respectively.3.
    
    As of December 31, 2007 and 2006, the Company reported total reinsurance receivables on unpaid
losses of $250.1 million and $286.2 million, respectively.4.
    
    As of December 31, 2007 and 2006, the Company reported prepaid reinsurance premiums of
$21.7 million and $29.6 million, respectively.
    1.
    
    For the years ended December 31, 2007, 2006 and 2005 the Company
reported total ceded premiums earned of $68.4 million, $79.1 million
and $65.7 million, respectively.2.
    
    For the years ended December 31, 2007, 2006 and 2005 the Company
reported ceded incurred losses and loss adjustment expenses of $31.1
million, $63.3 million and $90.5 million, respectively.
  8




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##### Table of Contents



1.
    
    The Company made reinsurance premium payments of $78.3 million,
$77.4 million and $56.3 million for the years ended December 31, 2007,
2006 and 2005, respectively.2.
    
    The Company received reinsurance collections on paid losses of $75.9
million, $57.2 million and $25.1 million for the years ended
December 31, 2007, 2006 and 2005, respectively.
  Reserves
         9




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.
  10




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Net Loss Retention:
  Shock Losses:
   Loss Reporting Tail:
   Frequency of Losses:
  Loss Estimates:
  11




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Catastrophe Losses:
    See Asbestos and Environmental Reserves.
    12




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Gross
    
    
    Net(in thousands)Ocean marine
    
    $
    197,511
    
    
    $
    112,288Inland marine/fire
    
    
    22,693
    
    
    
    7,795Other liability
    
    
    211,182
    
    
    
    156,238Aircraft
    
    
    125,149
    
    
    
    30,084Total
    
    $
    556,535
    
    
    $
    306,405
    13




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Asbestos and Environmental Reserves
      14




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Year ended December 31,2007
    
    2006
    
    2005(in thousands)Asbestos/EnvironmentalNet unpaid losses and loss adjustment expenses (including IBNR) at
the beginning of the period
    
    $
    12,222
    
    
    $
    12,960
    
    
    $
    12,759Net incurred losses and loss adjustment expenses
    
    
    (43
    )
    
    
    576
    
    
    
    (237
    )Net paid loss settlements
    
    
    (766
    )
    
    
    (945
    )
    
    
    638Net loss adjustment expenses payments (cost of administering claims)
    
    
    (549
    )
    
    
    (369
    )
    
    
    (200
    )Net unpaid losses and loss adjustment expenses (including IBNR) at
end of period
    
    $
    10,864
    
    
    $
    12,222
    
    
    $
    12,960
  Year ended December 31,2007
    
    2006
    
    2005Number of claims pending at beginning of period
    
    
    401
    
    
    
    469
    
    
    
    475Number of claims reported
    
    
    74
    
    
    
    80
    
    
    
    96Number of claims settled/dismissed or otherwise resolved
    
    
    (91
    )
    
    
    (148
    )
    
    
    (102
    )Number of claims pending at end of period
    
    
    384
    
    
    
    401
    
    
    
    469
  Other Reserves
  Loss Reserve Table
    15




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16




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Year Ended December 31,1997
    
    1998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007(Dollars in thousands)Estimated Liability for Net Unpaid Losses
and Loss Adjustment Expenses222,335
    
    
    
    213,589
    
    
    
    196,865
    
    
    
    199,685
    
    
    
    210,953
    
    
    
    208,979
    
    
    
    242,311
    
    
    
    255,479
    
    
    
    289,217
    
    
    
    292,941
    
    
    
    306,405Cumulative Amount of Net Losses and
Loss Adjustment Expenses Paid as a
Percentage of Original Estimate:1 Year Later
    
    
    19
    %
    
    
    20
    %
    
    
    24
    %
    
    
    28
    %
    
    
    30
    %
    
    
    8
    %
    
    
    18
    %
    
    
    17
    %
    
    
    25
    %
    
    
    22
    %2 Years Later
    
    
    32
    %
    
    
    35
    %
    
    
    39
    %
    
    
    56
    %
    
    
    30
    %
    
    
    24
    %
    
    
    27
    %
    
    
    33
    %
    
    
    38
    %3 Years Later
    
    
    43
    %
    
    
    43
    %
    
    
    53
    %
    
    
    64
    %
    
    
    41
    %
    
    
    32
    %
    
    
    38
    %
    
    
    45
    %4 Years Later
    
    
    49
    %
    
    
    51
    %
    
    
    58
    %
    
    
    70
    %
    
    
    47
    %
    
    
    43
    %
    
    
    49
    %5 Years Later
    
    
    54
    %
    
    
    55
    %
    
    
    63
    %
    
    
    72
    %
    
    
    55
    %
    
    
    53
    %6 Years Later
    
    
    57
    %
    
    
    59
    %
    
    
    64
    %
    
    
    79
    %
    
    
    62
    %7 Years Later
    
    
    61
    %
    
    
    60
    %
    
    
    70
    %
    
    
    84
    %8 Years Later
    
    
    61
    %
    
    
    65
    %
    
    
    74
    %9 Years Later
    
    
    66
    %
    
    
    68
    %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
    
    
    91
    %
    
    
    94
    %
    
    
    96
    %
    
    
    105
    %
    
    
    102
    %
    
    
    99
    %
    
    
    94
    %
    
    
    95
    %
    
    
    97
    %
    
    
    95
    %2 Years Later
    
    
    87
    %
    
    
    87
    %
    
    
    94
    %
    
    
    108
    %
    
    
    101
    %
    
    
    94
    %
    
    
    89
    %
    
    
    90
    %
    
    
    91
    %3 Years Later
    
    
    83
    %
    
    
    84
    %
    
    
    95
    %
    
    
    104
    %
    
    
    96
    %
    
    
    90
    %
    
    
    86
    %
    
    
    88
    %4 Years Later
    
    
    81
    %
    
    
    85
    %
    
    
    91
    %
    
    
    103
    %
    
    
    94
    %
    
    
    88
    %
    
    
    86
    %5 Years Later
    
    
    81
    %
    
    
    82
    %
    
    
    92
    %
    
    
    102
    %
    
    
    92
    %
    
    
    90
    %6 Years Later
    
    
    80
    %
    
    
    83
    %
    
    
    90
    %
    
    
    102
    %
    
    
    94
    %7 Years Later
    
    
    81
    %
    
    
    82
    %
    
    
    90
    %
    
    
    103
    %8 Years Later
    
    
    81
    %
    
    
    82
    %
    
    
    91
    %9 Years Later
    
    
    81
    %
    
    
    82
    %10 Years Later
    
    
    81
    %Net Cumulative
    
    
    41,382
    
    
    
    37,635
    
    
    
    17,461
    
    
    
    (6,169
    )
    
    
    13,405
    
    
    
    20,670
    
    
    
    32,848
    
    
    
    29,952
    
    
    
    24,889
    
    
    
    13,820Redundancy/(Deficiency)Gross Unpaid
    
    
    388,402
    
    
    
    401,584
    
    
    
    425,469
    
    
    
    411,267
    
    
    
    534,189
    
    
    
    516,002
    
    
    
    518,930
    
    
    
    503,261
    
    
    
    588,865
    
    
    
    579,179
    
    
    
    556,535Losses and Loss
Adjustment ExpensesReinsurance
    
    
    166,067
    
    
    
    187,995
    
    
    
    228,604
    
    
    
    211,582
    
    
    
    323,236
    
    
    
    307,023
    
    
    
    276,619
    
    
    
    247,782
    
    
    
    299,648
    
    
    
    286,238
    
    
    
    250,130Recoverable on Unpaid
Losses and Loss
Adjustment ExpensesReserve
    
    
    430,041
    
    
    
    451,902
    
    
    
    465,380
    
    
    
    474,302
    
    
    
    573,949
    
    
    
    506,468
    
    
    
    484,596
    
    
    
    470,173
    
    
    
    596,696
    
    
    
    561,591Re-estimated GrossReserve
    
    
    249,088
    
    
    
    275,948
    
    
    
    285,975
    
    
    
    268,448
    
    
    
    376,401
    
    
    
    318,159
    
    
    
    275,133
    
    
    
    244,646
    
    
    
    332,367
    
    
    
    282,470Re-estimated
Reinsurance
RecoverableGross Cumulative
    
    
    (41,641
    )
    
    
    (50,318
    )
    
    
    (39,911
    )
    
    
    (63,035
    )
    
    
    (39,760
    )
    
    
    9,534
    
    
    
    34,334
    
    
    
    33,088
    
    
    
    (7,831
    )
    
    
    17,588Redundancy/(Deficiency)
   17




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##### Table of Contents



Year ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Net liability for losses and loss adjustment expenses at beginning of year
    
    $
    292,941
    
    
    $
    289,217
    
    
    $
    255,479Provision for losses and loss adjustment expenses occurring in current year
    
    
    103,664
    
    
    
    93,803
    
    
    
    105,537Increase (decrease) in estimated losses and loss adjustment expenses for
claims occurring in prior years (1)
    
    
    (13,820
    )
    
    
    (7,667
    )
    
    
    (13,247
    )Net loss and loss adjustment expenses Incurred
    
    
    89,844
    
    
    
    86,136
    
    
    
    92,290Less:Losses and loss adjustment expense payments for claims occurring during:Current year
    
    
    12,136
    
    
    
    9,641
    
    
    
    15,453Prior years
    
    
    64,244
    
    
    
    72,771
    
    
    
    43,09976,380
    
    
    
    82,412
    
    
    
    58,552Net liability for losses and loss adjustment expenses at year end
    
    
    306,405
    
    
    
    292,941
    
    
    
    289,217Ceded unpaid losses and loss adjustment expenses at year end
    
    
    250,130
    
    
    
    286,238
    
    
    
    299,648Gross unpaid losses and loss adjustment expenses at year end
    
    $
    556,535
    
    
    $
    579,179
    
    
    $
    588,865
 18




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##### Table of Contents



(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 $13.8 million decrease in 2007 was largely caused by favorable
development in the 2003-2005 accident years for the ocean marine line,
which generally resulted from favorable loss trends in the risk class.
Another factor contributing to the decrease was $6.2 million recorded
on the novation of excess workers compensation policies in the other
liability line for accident years 2004-2006,which was partially offset
by adverse development of $3.0 million in the professional liability
class as a result of two large claims in the 2006 accident year. The
inland marine/fire segment also reported favorable loss development
partially due to lower reported severity losses. The favorable
development in 2007 was partially offset by approximately $3.3 million
in adverse development from the runoff aviation class.The $7.7 million decrease in 2006 primarily reflected favorable
development in the 2005 and 2004 accident years of ocean marine due in
part to lower settlements of case reserve estimates, higher than
expected receipts of salvage and subrogation recoveries and lower
emergence of actual versus expected losses. Partially offsetting this
benefit was adverse development in the 2005 and 2004 accident years in
both of the commercial auto and surety classes as a result of higher
than initially anticipated loss ratios. 2004 was the first full year
of writing commercial auto and surety premiums.The $13.2 million decrease in 2005 primarily reflected the recognition
of favorable development in the ocean marine line of business,
particularly in the 2001 to 2003 accident years. The Companys net
loss retention per risk, or occurrence, increased substantially in the
ocean marine line during the 2001-2003 accident years from previous
years. Our net loss retentions in the ocean marine line of business
for the 1998, 1999 and 2000 years were $50,000, $50,000 and $100,000,
respectively. This compared to net loss retentions in the ocean marine
line of business for the 2001, 2002 and 2003 years of $1,500,000,
$2,000,000 and $2,000,000, respectively. The Company estimated higher
IBNR amounts in the 2001 to 2003 accident years to correspond to the
larger net loss retentions. Our subsequent analysis of our 2004 actual
loss development, however, indicated a trend, which continued in 2005,
that the actual loss emergence for the larger net retention years of
2001 to 2003 was not developing as we had originally anticipated.
These results compared favorably with those obtained through a
statistical
evaluation of losses using the Bornheutter-Ferguson, paid and incurred methods.
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. Further contributing to
the increase was the 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.  19




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##### Table of Contents



Year ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Net liability for losses and loss adjustment expenses reported based on
statutory accounting principles
    
    $
    289,912
    
    
    $
    275,296
    
    
    $
    267,955Liability for losses and loss adjustment expenses assumed from two former
pool members (excludes $3,370, $3,379 and $3,000 at December 31, 2007, 2006
and 2005, accounted for in the statutory liability for losses and loss
adjustment expenses)
    
    
    7,667
    
    
    
    9,438
    
    
    
    11,609Other, net
    
    
    8,826
    
    
    
    8,207
    
    
    
    9,653Net liability for losses and loss adjustment expenses reported based on GAAP
    
    
    306,405
    
    
    
    292,941
    
    
    
    289,217Ceded liability for unpaid losses and loss adjustment expenses
    
    
    250,130
    
    
    
    286,238
    
    
    
    299,648Gross liability for unpaid losses and loss adjustment expenses
    
    $
    556,535
    
    
    $
    579,179
    
    
    $
    588,865
 Regulation
      20




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##### Table of Contents



Year ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(Dollars in thousands)Net premiums written
    
    $
    167,853
    
    
    $
    154,860
    
    
    $
    133,892
    
    
    $
    137,128
    
    
    $
    98,307Policyholders surplus
    
    
    203,162
    
    
    
    197,289
    
    
    
    186,848
    
    
    
    181,633
    
    
    
    186,325Ratio
    
    
    .83 to 1
    
    
    
    .78 to 1
    
    
    
    .72 to 1
    
    
    
    .75 to 1
    
    
    
    .53 to 1
     21




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##### Table of Contents



Investment Policy
   Liquidity Portfolio:
 Fixed Income Portfolio:
 Equity and Equity-Type Securities (Hedge Funds):
 22




---



##### Table of Contents



Liquidity Portfolio:
 Fixed Income Portfolio:
 Equity and Equity-Type Securities (Hedge Funds):
 Subsidiaries
   23




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##### Table of Contents



Average
    
    
    
    
    
    
    
    
    
    AverageDecember 31, 2007
    
    S&P Rating
    
    Percent
    
    December 31, 2006
    
    S&P Rating
    
    PercentFixed maturitiesAvailable for Sale (Fair Value):U.S. Treasury securities
    
    $
    14,335,541
    
    
    AAA
    
    
    2.04
    %
    
    $
    11,042,269
    
    
    AAA
    
    
    1.66
    %Municipal obligations
    
    
    7,810,318
    
    
    
    A1
    
    
    
    1.11
    %
    
    
    7,802,878
    
    
    
    A1
    
    
    
    1.17
    %Corporate securities
    
    
    5,853,942
    
    
    BB+
    
    
    0.83
    %
    
    
    12,138,485
    
    
    BBB
    
    
    1.83
    %Mortgage-backed securities
    
    
    134,890,799
    
    
    AAA
    
    
    19.25
    %
    
    
    296,582,893
    
    
    AAA
    
    
    44.61
    %Subtotal
    
    $
    162,890,600
    
    
    AAA
    
    
    23.23
    %
    
    $
    327,566,525
    
    
    AAA
    
    
    49.27
    %Trading (Fair Value):Municipal obligations
    
    
    70,243,560
    
    
    AA+
    
    
    10.02
    %
    
    
    
    
    
    
    
    
    
    
    Commercial middle market debt
    
    
    8,293,725
    
    
    
    B+
    
    
    
    1.18
    %
    
    
    
    
    
    
    
    
    
    
    Total fixed maturities
    
    $
    241,427,885
    
    
    AA+
    
    
    34.43
    %
    
    $
    327,566,525
    
    
    AAA
    
    
    49.27
    %Equity securities trading (Fair Value):Preferred stock
    
    
    66,325,265
    
    
    AA-
    
    
    9.46
    %
    
    
    
    
    
    
    
    
    
    
    Short-term investments (at Cost)
    
    
    165,000
    
    
    AAA
    
    
    0.02
    %
    
    
    136,601,455
    
    
    AAA
    
    
    20.55Cash
    
    
    204,913,343
    
    
    
    
    
    
    
    29.23
    %
    
    
    18,379,401
    
    
    
    
    
    
    
    2.76
    %Total fixed maturities, equity securities,
cash and short-term investments
    
    $
    512,831,493
    
    
    
    
    
    
    
    73.14
    %
    
    $
    482,547,381
    
    
    
    
    
    
    
    72.58
    %Limited partnership hedge funds (at Equity)
    
    
    188,295,547
    
    
    
    
    
    
    
    26.86
    %
    
    
    182,324,313
    
    
    
    
    
    
    
    27.42
    %Total investment portfolio
    
    $
    701,127,040
    
    
    
    
    
    
    
    100.00
    %
    
    $
    664,871,694
    
    
    
    
    
    
    
    100.00
    %
 24




---



##### Table of Contents



Average
    
    
    AverageUnderlying
    
    
    FICOLoan to
    
    
    Credit
    
    
    Moodys
    
    
    S&PSecurity description
    
    Issue date
    
    
    Fair value
    
    
    Value % (1)
    
    
    Score (1)
    
    
    Rating
    
    
    RatingAmerican Home Mortgage Assets
    
    
    7/1/2006
    
    
    $
    20,220,609
    
    
    
    88.80
    
    
    
    706
    
    
    AAA
    
    AAABear Stearns Mortgage Funding
    
    
    9/29/2006
    
    
    
    12,921,619
    
    
    
    83.30
    
    
    
    710
    
    
    AAA
    
    AAACountrywide Alt Loan Trust A1
    
    
    11/1/2005
    
    
    
    13,001,835
    
    
    
    82.60
    
    
    
    697
    
    
    AAA
    
    AAACountrywide Alternative Loan Trust
    
    
    12/1/2005
    
    
    
    14,083,927
    
    
    
    81.70
    
    
    
    699
    
    
    AAA
    
    AAAResidential Accredit Loans, Inc.
    
    
    10/28/2005
    
    
    
    12,608,860
    
    
    
    78.70
    
    
    
    704
    
    
    AAA
    
    AAAResidential Accredit Loans, Inc.
    
    
    12/1/2005
    
    
    
    15,836,094
    
    
    
    82.50
    
    
    
    700
    
    
    AAA
    
    AAAWashington Mutual
    
    
    12/21/2005
    
    
    
    11,607,434
    
    
    
    79.10
    
    
    
    715
    
    
    AAA
    
    AAAWashington Mutual
    
    
    7/1/2006
    
    
    
    17,288,400
    
    
    
    79.20
    
    
    
    731
    
    
    AAA
    
    AAAWashington Mutual 2006-AR13 1A
    
    
    9/1/2006
    
    
    
    17,322,021
    
    
    
    76.20
    
    
    
    729
    
    
    AAA
    
    AAA$
    134,890,799
 
 (1)
    
    At issue date   Relationship with Mariner Partners, Inc.
  25




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##### 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
  26




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##### 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.
 27




---



##### Table of Contents




    
    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 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
   28




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##### Table of Contents



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.
  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).
   29




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##### Table of Contents



Subsidiaries
  30




---



##### Table of Contents



Competition
     Employees
  31




---



##### Table of Contents



Code of Conduct and Corporate Governance Documents
    Available Information
  
 Item 1A. Risk Factors.
  Our inability to assess underwriting risk accurately could reduce our net income.
  Exposure to catastrophe or severity losses in loss reserves.
  32




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##### Table of Contents



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.
  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.
  33




---



##### Table of Contents



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.
  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.
  34




---



##### Table of Contents



Insurance laws and regulations restrict our ability to operate.
   Computer system risks
  Failure to comply with insurance laws and regulations could have a material adverse effect on our
business.
  35




---



##### Table of Contents



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.
  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.
  36




---



##### Table of Contents



Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  
  
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
  2007
    
    2006High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    42.22
    
    
    $
    35.60
    
    
    $
    29.99
    
    
    $
    24.30Second Quarter
    
    
    44.95
    
    
    
    39.15
    
    
    
    32.80
    
    
    
    27.09Third Quarter
    
    
    42.02
    
    
    
    25.56
    
    
    
    32.99
    
    
    
    27.85Fourth Quarter
    
    
    31.59
    
    
    
    19.66
    
    
    
    37.50
    
    
    
    30.28
  37




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##### Table of Contents



Dividend Policy
  38




---



##### Table of Contents



Item 6. Selected Financial Data
   Year ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands, except per share amounts)Revenues:Net premiums earned
    
    $
    166,096
    
    
    $
    151,834
    
    
    $
    134,557
    
    
    $
    116,333
    
    
    $
    96,394Net investment income
    
    
    35,489
    
    
    
    47,897
    
    
    
    36,060
    
    
    
    23,679
    
    
    
    22,394Commission income (loss)
    
    
    414
    
    
    
    542
    
    
    
    1,198
    
    
    
    461
    
    
    
    (230
    )Net realized investment (losses) gains
    
    
    (6,903
    )
    
    
    (402
    )
    
    
    (805
    )
    
    
    678
    
    
    
    550Other income (loss), net
    
    
    (4,659
    )
    
    
    596
    
    
    
    334
    
    
    
    1,790
    
    
    
    1,688Total revenues
    
    $
    190,437
    
    
    $
    200,467
    
    
    $
    171,344
    
    
    $
    142,941
    
    
    $
    120,796Expenses:Net losses and loss adjustment
expenses incurred
    
    $
    89,844
    
    
    $
    86,136
    
    
    $
    92,290
    
    
    $
    66,558
    
    
    $
    55,715Policy acquisition expenses
    
    
    37,695
    
    
    
    31,336
    
    
    
    30,491
    
    
    
    25,166
    
    
    
    19,430General and administrative expenses
    
    
    36,018
    
    
    
    31,402
    
    
    
    27,183
    
    
    
    23,247
    
    
    
    19,428Interest expense
    
    
    6,726
    
    
    
    6,712
    
    
    
    6,679
    
    
    
    5,353
    
    
    
    26Total expenses
    
    $
    170,283
    
    
    $
    155,586
    
    
    $
    156,643
    
    
    $
    120,324
    
    
    $
    94,599Income before income taxes
    
    $
    20,154
    
    
    $
    44,881
    
    
    $
    14,701
    
    
    $
    22,617
    
    
    $
    26,197Income taxes expense (benefit)Current
    
    
    10,509
    
    
    
    16,777
    
    
    
    6,152
    
    
    
    3,835
    
    
    
    8,987Deferred
    
    
    (3,727
    )
    
    
    (1,746
    )
    
    
    (1,152
    )
    
    
    4,151
    
    
    
    1176,782
    
    
    
    15,031
    
    
    
    5,000
    
    
    
    7,986
    
    
    
    9,104Net income
    
    $
    13,372
    
    
    $
    29,850
    
    
    $
    9,701
    
    
    $
    14,631
    
    
    $
    17,093BASIC EARNINGS PER SHARE:Weighted average shares outstanding
    
    
    8,896
    
    
    
    8,807
    
    
    
    8,734
    
    
    
    9,736
    
    
    
    9,673Basic earnings per share
    
    $
    1.50
    
    
    $
    3.39
    
    
    $
    1.11
    
    
    $
    1.50
    
    
    $
    1.77DILUTED EARNINGS PER SHARE:Weighted average shares outstanding
    
    
    9,190
    
    
    
    9,177
    
    
    
    8,918
    
    
    
    9,916
    
    
    
    9,828Diluted earnings per share
    
    $
    1.46
    
    
    $
    3.25
    
    
    $
    1.09
    
    
    $
    1.48
    
    
    $
    1.74Dividends declared per share
    
    $
    .32
    
    
    $
    .30
    
    
    $
    .24
    
    
    $
    .24
    
    
    $
    .24
 39




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##### Table of Contents



December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(In thousands)Total cash and investments
    
    $
    701,127
    
    
    $
    664,872
    
    
    $
    622,404
    
    
    $
    630,872
    
    
    $
    519,642Total assets
    
    
    1,107,977
    
    
    
    1,119,296
    
    
    
    1,090,419
    
    
    
    997,094
    
    
    
    875,125Unpaid losses and loss
adjustment expenses
    
    
    556,535
    
    
    
    579,179
    
    
    
    588,865
    
    
    
    503,261
    
    
    
    518,930Notes payable
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    Total shareholders equity
    
    
    279,446
    
    
    
    270,700
    
    
    
    239,284
    
    
    
    258,118
    
    
    
    244,291Book value per share
    
    $
    31.56
    
    
    $
    29.14
    
    
    $
    26.44
    
    
    $
    25.91
    
    
    $
    24.47
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Executive Overview and Highlights-2007 year
 
    
    Net income of $13.4 million or $1.46 per diluted share
    
    Total shareholders equity of $279.5 million, or $31.56 per diluted share
    
    Net premium growth in core lines of 9% over 2006
    
    Favorable net loss reserve development reported on prior year loss reserves of $13.8 million
    
    Loss ratio of 54.1%
    
    After tax charges of $3.4 million for the write off of inefficient computer software
    
    After tax charges of $1.1 million for expenses relating to an investment in an asset management company that was not consummated
    
    Net investment income of $35.5 million
    
    Realized investment losses of $6.9 million
    
    Total cash and invested assets of $701.1 million at year end 2007
    
    A.M. Best Rating of A (excellent) for New York Marine and Gotham
 Results of Operations
   NYMAGIC Gross Premiums Written
    
    Year Ended December 31,By Segment
    
    2007
    
    2006
    
    2005(Dollars in thousands)Ocean Marine
    
    $
    98,689
    
    
    
    43
    %
    
    $
    104,876
    
    
    
    43
    %
    
    $
    105,628
    
    
    
    53
    %Inland Marine/Fire
    
    
    18,625
    
    
    
    8
    %
    
    
    21,595
    
    
    
    9
    %
    
    
    25,000
    
    
    
    12
    %Other Liability
    
    
    110,986
    
    
    
    49
    %
    
    
    114,754
    
    
    
    48
    %
    
    
    69,346
    
    
    
    35
    %Subtotal
    
    
    228,300
    
    
    
    100
    %
    
    
    241,225
    
    
    
    100
    %
    
    
    199,974
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    88
    
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    396
    
    
    
    Total
    
    $
    228,388
    
    
    
    100
    %
    
    $
    241,309
    
    
    
    100
    %
    
    $
    200,370
    
    
    
    100
    %
 40




---



##### Table of Contents



NYMAGIC Net Premiums Written
    
    Year Ended December 31,By Segment
    
    2007
    
    2006
    
    2005(Dollars in thousands)Ocean Marine
    
    $
    68,192
    
    
    
    41
    %
    
    $
    75,243
    
    
    
    49
    %
    
    $
    70,596
    
    
    
    53
    %Inland Marine/Fire
    
    
    6,935
    
    
    
    4
    %
    
    
    7,097
    
    
    
    4
    %
    
    
    8,452
    
    
    
    6
    %Other Liability
    
    
    92,618
    
    
    
    55
    %
    
    
    72,231
    
    
    
    47
    %
    
    
    54,592
    
    
    
    41
    %Subtotal
    
    
    167,745
    
    
    
    100
    %
    
    
    154,571
    
    
    
    100
    %
    
    
    133,640
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    108
    
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    252
    
    
    
    Total
    
    $
    167,853
    
    
    
    100
    %
    
    $
    154,860
    
    
    
    100
    %
    
    $
    133,892
    
    
    
    100
    %
 NYMAGIC Net Premiums Earned
    
    Year Ended December 31,By Segment
    
    2007
    
    2006
    
    2005(Dollars in thousands)Ocean Marine
    
    $
    71,637
    
    
    
    43
    %
    
    $
    78,350
    
    
    
    52
    %
    
    $
    71,688
    
    
    
    53
    %Inland Marine/Fire
    
    
    6,978
    
    
    
    4
    %
    
    
    7,793
    
    
    
    5
    %
    
    
    7,340
    
    
    
    6
    %Other Liability
    
    
    87,373
    
    
    
    53
    %
    
    
    65,402
    
    
    
    43
    %
    
    
    55,277
    
    
    
    41
    %Subtotal
    
    
    165,988
    
    
    
    100
    %
    
    
    151,545
    
    
    
    100
    %
    
    
    134,305
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    108
    
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    252
    
    
    
    Total
    
    $
    166,096
    
    
    
    100
    %
    
    $
    151,834
    
    
    
    100
    %
    
    $
    134,557
    
    
    
    100
    %
     41




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Year Ended December 31, 2007 as Compared to Year Ended December 31, 2006
            42




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Years ended December 31,2007
    
    
    2006(in millions)Fixed maturities, available for sale
    
    $
    13.9
    
    
    $
    11.8Fixed maturities, trading securities
    
    
    2.3
    
    
    
    15.8Short-term investments
    
    
    8.7
    
    
    
    7.8Equity in earnings of limited partnerships
    
    
    13.0
    
    
    
    16.5Total investment income
    
    
    37.9
    
    
    
    51.9Investment expenses
    
    
    (2.4
    )
    
    
    (4.0
    )Net investment income
    
    $
    35.5
    
    
    $
    47.9
    Accounting for the Impairment or
Disposal of Long-Lived Assets.
     44




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Year Ended December 31, 2006 as Compared to Year Ended December 31, 2005
          45




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46




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Years ended December 31,2006
    
    
    2005(in millions)Fixed maturities, available for sale
    
    $
    11.8
    
    
    $
    7.8Fixed maturities, trading securities
    
    
    15.8
    
    
    
    8.5Short-term investments
    
    
    7.8
    
    
    
    6.2Equity in earnings of limited partnerships
    
    
    16.5
    
    
    
    17.6Total investment income
    
    
    51.9
    
    
    
    40.1Investment expenses
    
    
    (4.0
    )
    
    
    (4.0
    )Net investment income
    
    $
    47.9
    
    
    $
    36.1
     47




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Liquidity and Capital Resources
    48




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th th
 49




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50




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Off-Balance Sheet Arrangements
  Contractual Obligations
  Payments Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(in thousands)Long-term debt obligations
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100,000Interest on debt obligations
    
    
    42,250
    
    
    
    6,500
    
    
    
    13,000
    
    
    
    13,000
    
    
    
    9,750Losses and loss expenses (1)
    
    
    556,535
    
    
    
    124,255
    
    
    
    149,277
    
    
    
    97,053
    
    
    
    185,950Operating lease obligations
    
    
    35,585
    
    
    
    3,620
    
    
    
    8,312
    
    
    
    8,253
    
    
    
    15,400Funding commitment (2)(3)
    
    
    20,400
    
    
    
    20,400
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    754,770
    
    
    $
    154,775
    
    
    $
    170,589
    
    
    $
    118,306
    
    
    $
    311,100
 
 (1)
    
    Represents an estimated payout based upon historical paid loss development patterns.(2)
    
    The commitment to provide capital to Tricadia at the
managers discretion is $15.4 million. Currently, Tricadia
is not assembling any CDO assets as market conditions preclude
any meaningful activity. Tricadia also has an investment in Tiptree
Financial Partners LP who maintains trading activities in their CLO
operations. It is uncertain whether such funds will be drawn to fund
the operations of Tricadia or Tiptree Financial Partners LP.(3)
    
    In January 2008 the Company made a commitment to purchase an
interest in a hedge fund in the amount of $5.0 million. Critical accounting policies
  51




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Effect of recent accounting pronouncements
 Accounting for Uncertainty in Income Taxes
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Accounting for Income
Tax Benefits of Dividends on Share-Based Payment Awards
   53




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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
    
    
    Fair2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    after
    
    
    Cost
    
    
    ValueTax-exempts
    
    $
    7
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    71
    
    
    $
    78
    
    
    $
    78Average interest rate
    
    
    3.4
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.1
    %
    
    
    
    
    
    
    Taxables
    
    $
    8
    
    
    $
    1
    
    
    $
    
    
    
    $
    9
    
    
    $
    4
    
    
    $
    143
    
    
    $
    165
    
    
    $
    163Average interest rate
    
    
    4.0
    %
    
    
    9.5
    %
    
    
    
    
    
    
    4.3
    %
    
    
    7.6
    %
    
    
    5.8
    %
    
    
    
    
    
    
    Total
    
    $
    15
    
    
    $
    1
    
    
    $
    
    
    
    $
    9
    
    
    $
    4
    
    
    $
    214
    
    
    $
    243
    
    
    $
    241
    54




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Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  55




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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 and Related Stockholder
Matters
  Number ofsecuritiesremainingavailable forNumber of
    
    
    
    
    
    future issuancesecurities to be
    
    Weighted-average
    
    under equityissued upon
    
    
    
    
    
    compensationexercise of
    
    exercise price of
    
    plansoutstanding
    
    
    
    
    
    (excludingoptions,
    
    outstanding options,
    
    securitieswarrants and
    
    
    
    
    
    reflected inrights
    
    warrants and rights
    
    column (a))Plan category
    
    (a)
    
    (b)
    
    (c)Equity compensation plans approved by security holders
    
    
    432,750
    
    
    $
    15.69
    
    
    
    344,252Equity compensation plans not approved by security
holders
    
    
    4,000
    
    
    
    
    
    
    
    Total
    
    
    436,750
    
    
    $
    15.38
    
    
    
    344,252
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  56




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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).
 57




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##### 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).
 58




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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
    
    Letter Agreement dated as of March 22, 2006 by and between NYMAGIC,
INC. and Conning Capital Partners VI, L.P. (Filed as Exhibit 99.1 to
the Registrants Current Report on Form 8-K (File No. 1-11238) filed
on March 28, 2006 and incorporated herein by reference).10.45
    
    Amended and Restated Option Certificate dated as of March 22, 2006
by and between NYMAGIC, INC. and Conning Capital Partners VI, L.P
(Filed as Exhibit 99.1 to the Registrants Current Report on
Form 8-K (File No. 1-11238) filed on March 28, 2006 and incorporated
herein by reference).
 59




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+10.46
    
    Consulting Agreement, dated as of March 30, 2006, by and between
William D. Shaw, Jr. and NYMAGIC, INC.( (Filed as Exhibit 10.1 to
the Registrants Current Report on Form 8-K (File No. 1-11238) filed
on March 31, 2006 and incorporated herein by reference).+10.47
    
    Employment Agreement, dated as of April 17, 2006, by and between A.
George Kallop and NYMAGIC, INC. (Filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K (File No. 1-11238) filed on
April 20, 2006 and incorporated herein by reference).+10.48
    
    Performance Share Award Agreement, dated as of April 17, 2006, by
and between A. George Kallop and NYMAGIC, INC. (Exhibits omitted.
Will be provided to the SEC upon request.) (Filed as Exhibit 10.2 to
the Registrants Current Report on Form 8-K (File No. 1-11238) filed
on April 20, 2006 and incorporated herein by reference).10.49
    
    Employment Agreement, dated as of April 18, 2006, by and between George R. Trumbull, III and NYMAGIC, INC.
(Filed as Exhibit 10.3 to the Registrants Current Report on Form 8-K (File No. 1-11238) filed on
April 20, 2006 and incorporated herein by reference).10.50
    
    Performance Share Award Agreement, dated as of April 18, 2006, by and between George R. Trumbull, III and
NYMAGIC, INC. (Filed as Exhibit 10.4 to the Registrants Current Report on Form 8-K (File No. 1-11238)
filed on April 20, 2006 and incorporated herein by reference).10.51
    
    Amended and Restated Limited Partnership Agreement by and between NYMAGIC, INC., Tricadia CDO Fund, L.P.,
as general partner, and the limited partners named therein, dated as of August 1, 2006. (Filed as
Exhibit 99.1 to the Registrants Current Report on Form 8-K (File No. 1-11238) filed on August 23, 2006
and incorporated herein by reference).+10.52
    
    Employment Agreement, dated January 9, 2007, by and between George R. Trumbull, III and NYMAGIC, INC.
(Filed as Exhibit 10.52 of the Registrants Annual Report on
Form 10-K for the year ended December 31, 2006, (Commission File no. 1-11238) and incorporated herein by reference.+10.53
    
    2004 Amended and Restated Long-Term Incentive Plan Award Agreement, dated January 9, 2007, by and betweenNYMAGIC, INC. and George R.
Trumbull, III. (Filed as Exhibit 10.53 of the Registrants Annual Report on
Form 10-K for the year ended December 31, 2006, (Commission File no. 1-11238) and incorporated herein by reference.+10.54
    
    Amendment to Employment Agreement, dated January 9, 2007, by and between A. George Kallop and NYMAGIC, INC.
(Filed as Exhibit 10.54 of the Registrants Annual Report on
Form 10-K for the year ended December 31, 2006, (Commission File no. 1-11238) and incorporated herein by reference.+10.55
    
    2004 Amended and Restated Long-Term Incentive Plan Award Agreement, dated January 9, 2007, by and between
NYMAGIC, INC. and A. George Kallop.
(Filed as Exhibit 10.55 of the Registrants Annual Report on
Form 10-K for the year ended December 31, 2006, (Commission File no. 1-11238) and incorporated herein by reference.+10.56
    
    Consulting Agreement, dated as of March 22, 2007 by and between William D. Shaw, Jr. and NYMAGIC, INC.
(Filed as Exhibit 10.5 to the Registrants Quarterly Report on
Form 10-Q for the quarter ended March 31, 2007 (Commission File no. 1-11238) and incorporated herein by reference.+*10.57
    
    2004 Amended and Restated Long-term
Incentive Plan Award Agreement, dated January 9, 2008, between A.
George Kallop and NYMAGIC, INC.+*10.58
    
    2004 Amended and Restated Long-term
Incentive Plan Award Agreement, dated January 10, 2008, between
George R. Trumbull, III and NYMAGIC, INC.+*10.59
    
    Employment Agreement, dated
January 10, 2008, between NYMAGIC, INC. and George R. Trumbull, III.+*10.60
    
    Severance Agreement, dated
February 15, 2007, between Mutual Marine Office, Inc and Craig Lowenthal.*10.61
    
    Lease, dated June 5, 2007 by and between Metropolitan 919 Third Avenue LLC and New York Marine And General
Insurance Company.*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.*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. 60




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##### 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 12, 2008/s/ Glenn J. Angiolillo
 
Glenn J. Angiolillo
    
    Director
    
    March 12, 2008/s/ John T. Baily
 
John T. Baily
    
    Director
    
    March 12, 2008/s/ David E. Hoffman
 
David E. Hoffman
    
    Director
    
    March 12, 2008/s/ A. George Kallop
 
A. George Kallop
    
    Director and President and
 Chief Executive Officer
    
    March 12, 2008/s/ William J. Michaelcheck
 
William J. Michaelcheck
    
    Director
    
    March 12, 2008/s/ William D. Shaw, Jr.
 
William D. Shaw, Jr.
    
    Director
    
    March 12, 2008/s/ Robert G. Simses
 
Robert G. Simses
    
    Director
    
    March 12, 2008/s/ George R. Trumbull, III
 
George R. Trumbull, III
    
    Director and Chairman
    
    March 12, 2008/s/ Glenn R. Yanoff
 
Glenn R. Yanoff
    
    Director
    
    March 12, 2008/s/ David W. Young
 
David W. Young
    
    Director
    
    March 12, 2008/s/ Thomas J. Iacopelli

Thomas J. Iacopelli
    
    Principal Accounting Officer
and Chief Financial Officer
    
    March 12, 2008
 61




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##### 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-32Financial Statement Schedule III
    
    F-34Financial Statement Schedule V
    
    F-35Financial Statement Schedule VI
    
    F-36




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##### 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




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##### Table of Contents



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




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework ,




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##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2007
    
    
    2006ASSETSInvestments:Fixed maturities:Available for sale at fair value (amortized cost $162,579,526 and $327,432,016)
    
    $
    162,890,600
    
    
    $
    327,566,525Trading
commercial middle market debt at fair value (cost $9,982,500 and $0)
    
    
    8,293,725
    
    
    
    Trading
municipal obligations at fair value (cost $70,688,602 and $0)
    
    
    70,243,560
    
    
    
    Equity securities trading at fair value (cost $65,001,440 and $0)
    
    
    66,325,265
    
    
    
    Limited partnerships at equity
(cost $148,915,402 and $147,185,828)
    
    
    188,295,547
    
    
    
    182,324,313Short-term investments
    
    
    165,000
    
    
    
    136,601,455Cash and
cash equivalents
    
    
    204,913,343
    
    
    
    18,379,401Total cash and investments
    
    
    701,127,040
    
    
    
    664,871,694Accrued investment income
    
    
    2,590,664
    
    
    
    2,033,945Premiums and other receivables, net
    
    
    26,275,077
    
    
    
    29,266,353Receivable for securities sold
    
    
    22,885,923
    
    
    
    18,805,633Reinsurance receivables on unpaid losses, net
    
    
    250,129,540
    
    
    
    286,237,546Reinsurance receivables on paid losses, net
    
    
    38,804,022
    
    
    
    47,548,369Deferred policy acquisition costs
    
    
    14,989,585
    
    
    
    13,371,632Prepaid reinsurance premiums
    
    
    21,749,663
    
    
    
    29,579,428Deferred income taxes
    
    
    14,443,675
    
    
    
    10,778,960Property, improvements and equipment, net
    
    
    4,816,836
    
    
    
    9,949,970Other assets
    
    
    10,164,557
    
    
    
    6,852,772Total assets
    
    $
    1,107,976,582
    
    
    $
    1,119,296,302LIABILITIESUnpaid losses and loss adjustment expenses
    
    $
    556,535,344
    
    
    $
    579,178,634Reserve for unearned premiums
    
    
    87,577,497
    
    
    
    93,649,827Ceded reinsurance payable
    
    
    27,071,178
    
    
    
    44,792,821Notes payable
    
    
    100,000,000
    
    
    
    100,000,000Payable for securities purchased
    
    
    28,678,666
    
    
    
    Dividends payable
    
    
    815,267
    
    
    
    788,980Other liabilities
    
    
    27,853,083
    
    
    
    30,186,494Total liabilities
    
    
    828,531,035
    
    
    
    848,596,756SHAREHOLDERS EQUITYCommon stock
    
    
    15,672,090
    
    
    
    15,505,815Paid-in capital
    
    
    47,313,015
    
    
    
    42,219,900Accumulated other comprehensive income
    
    
    202,196
    
    
    
    87,432Retained earnings
    
    
    296,641,235
    
    
    
    286,147,400359,828,536
    
    
    
    343,960,547Treasury Stock, at cost, 6,965,077 and 6,647,377 shares
    
    
    (80,382,989
    )
    
    
    (73,261,001
    )Total shareholders equity
    
    
    279,445,547
    
    
    
    270,699,546Total liabilities and shareholders equity
    
    $
    1,107,976,582
    
    
    $
    1,119,296,302
  F-5




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##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
 Year ended December 31,2007
    
    2006
    
    2005Revenues:Net premiums earned
    
    $
    166,095,871
    
    
    $
    151,834,141
    
    
    $
    134,557,204Net investment income
    
    
    35,489,369
    
    
    
    47,897,224
    
    
    
    36,059,811Net realized investment losses
    
    
    (6,902,852
    )
    
    
    (402,554
    )
    
    
    (805,276
    )Commission and other income (loss), net
    
    
    (4,245,541
    )
    
    
    1,137,873
    
    
    
    1,532,756Total revenues
    
    
    190,436,847
    
    
    
    200,466,684
    
    
    
    171,344,495Expenses:Net losses and loss adjustment expenses incurred
    
    
    89,844,108
    
    
    
    86,135,655
    
    
    
    92,290,259Policy acquisition expenses
    
    
    37,694,535
    
    
    
    31,336,186
    
    
    
    30,491,014General and administrative expenses
    
    
    36,018,289
    
    
    
    31,401,429
    
    
    
    27,183,486Interest expense
    
    
    6,725,542
    
    
    
    6,712,064
    
    
    
    6,678,703Total expenses
    
    
    170,282,474
    
    
    
    155,585,334
    
    
    
    156,643,462Income before income taxes
    
    
    20,154,373
    
    
    
    44,881,350
    
    
    
    14,701,033Income tax provision:Current
    
    
    10,508,537
    
    
    
    16,776,694
    
    
    
    6,151,878Deferred
    
    
    (3,726,514
    )
    
    
    (1,745,824
    )
    
    
    (1,151,724
    )Total income tax expense
    
    
    6,782,023
    
    
    
    15,030,870
    
    
    
    5,000,154Net income
    
    $
    13,372,350
    
    
    $
    29,850,480
    
    
    $
    9,700,879Weighted average number of shares of common
stock outstanding-basic
    
    
    8,895,729
    
    
    
    8,806,928
    
    
    
    8,733,872Basic earnings per share
    
    $
    1.50
    
    
    $
    3.39
    
    
    $
    1.11Weighted average number of shares of common
stock outstanding-diluted
    
    
    9,190,228
    
    
    
    9,177,284
    
    
    
    8,918,190Diluted earnings per share
    
    $
    1.46
    
    
    $
    3.25
    
    
    $
    1.09
  F-6




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##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Year ended December 31,2007
    
    
    2006
    
    
    2005Common stock:Balance, beginning of year
    
    $
    15,505,815
    
    
    $
    15,415,790
    
    
    $
    15,335,740Shares issued
    
    
    166,275
    
    
    
    90,025
    
    
    
    80,050Balance, end of year
    
    
    15,672,090
    
    
    
    15,505,815
    
    
    
    15,415,790Paid-in capital:Balance, beginning of year
    
    $
    42,219,900
    
    
    $
    38,683,462
    
    
    $
    36,781,911Shares issued and other
    
    
    5,093,115
    
    
    
    3,536,438
    
    
    
    1,901,551Balance, end of year
    
    
    47,313,015
    
    
    
    42,219,900
    
    
    
    38,683,462Accumulated other comprehensive income (loss):Balance, beginning of year
    
    $
    87,432
    
    
    $
    (569,153
    )
    
    $
    742,364Unrealized gain (loss) on securities, net of reclassification adjustment
    
    
    114,764
    
    
    
    656,585
    
    
    
    (1,311,517
    )Other comprehensive income (loss)
    
    
    114,764
    
    
    
    656,585
    
    
    
    (1,311,517
    )Balance, end of year
    
    
    202,196
    
    
    
    87,432
    
    
    
    (569,153
    )Retained earnings:Balance, beginning of year
    
    $
    286,147,400
    
    
    $
    259,015,028
    
    
    $
    251,418,750Net income
    
    
    13,372,350
    
    
    
    29,850,480
    
    
    
    9,700,879Dividends declared
    
    
    (2,878,515
    )
    
    
    (2,718,108
    )
    
    
    (2,104,601
    )Balance, end of year
    
    
    296,641,235
    
    
    
    286,147,400
    
    
    
    259,015,028Treasury stock, at cost:Balance, beginning of year
    
    $
    (73,261,001
    )
    
    $
    (73,261,001
    )
    
    $
    (46,161,173
    )Net purchase of treasury shares
    
    
    (7,121,988
    )
    
    
    
    
    
    
    (27,099,828
    )Balance, end of year
    
    
    (80,382,989
    )
    
    
    (73,261,001
    )
    
    
    (73,261,001
    )Total Shareholders Equity
    
    
    279,445,547
    
    
    
    270,699,546
    
    
    
    239,284,126Comprehensive income:Net income
    
    $
    13,372,350
    
    
    $
    29,850,480
    
    
    $
    9,700,879Other comprehensive income (loss)
    
    
    114,764
    
    
    
    656,585
    
    
    
    (1,311,517
    )Comprehensive income
    
    
    13,487,114
    
    
    
    30,507,065
    
    
    
    8,389,362Number of SharesCommon stock, par value $1 each:Issued, beginning of year
    
    
    15,505,815
    
    
    
    15,415,790
    
    
    
    15,335,740Shares issued
    
    
    166,275
    
    
    
    90,025
    
    
    
    80,050Issued, end of year
    
    
    15,672,090
    
    
    
    15,505,815
    
    
    
    15,415,790Common stock, authorized shares, par value $1 each
    
    
    30,000,000
    
    
    
    30,000,000
    
    
    
    30,000,000Common stock, shares outstanding, end of year
    
    
    8,707,013
    
    
    
    8,858,438
    
    
    
    8,768,413Dividends declared per share
    
    $
    .32
    
    
    $
    .30
    
    
    $
    .24
  F-7




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##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    13,372,350
    
    
    $
    29,850,480
    
    
    $
    9,700,879Adjustments to reconcile net income to net cash (used in)
provided by operating activities:Provision for deferred taxes
    
    
    (3,726,514
    )
    
    
    (1,745,824
    )
    
    
    (1,151,724
    )Net realized investment losses
    
    
    6,902,852
    
    
    
    402,554
    
    
    
    805,276Equity in earnings of limited partnerships
    
    
    (12,985,185
    )
    
    
    (16,474,693
    )
    
    
    (17,603,357
    )Net bond amortization
    
    
    141,774
    
    
    
    200,614
    
    
    
    (268,182
    )Depreciation and other, net
    
    
    1,295,852
    
    
    
    968,818
    
    
    
    705,758Loss on abandonment of computer equipment and software
    
    
    5,315,965
    
    
    
    
    
    
    
    Changes in:Premiums and other receivables
    
    
    2,991,276
    
    
    
    (3,933,720
    )
    
    
    17,265,886Reinsurance receivables paid and unpaid, net
    
    
    44,852,353
    
    
    
    (6,098,829
    )
    
    
    (65,392,458
    )Ceded reinsurance payable
    
    
    (17,721,643
    )
    
    
    9,064,476
    
    
    
    10,265,504Accrued investment income
    
    
    (556,719
    )
    
    
    792,120
    
    
    
    (176,521
    )Deferred policy acquisition costs
    
    
    (1,617,953
    )
    
    
    (1,379,904
    )
    
    
    1,063,569Prepaid reinsurance premiums
    
    
    7,829,765
    
    
    
    (7,386,000
    )
    
    
    (815,271
    )Other assets
    
    
    (3,311,785
    )
    
    
    (1,343,180
    )
    
    
    (794,902
    )Unpaid losses and loss adjustment expenses
    
    
    (22,643,290
    )
    
    
    (9,686,515
    )
    
    
    85,604,011Reserve for unearned premiums
    
    
    (6,072,330
    )
    
    
    10,411,836
    
    
    
    149,597Other liabilities
    
    
    (4,244,598
    )
    
    
    (2,832,280
    )
    
    
    7,189,803Trading portfolio activities
    
    
    (116,177,935
    )
    
    
    109,763,613
    
    
    
    (110,580,538
    )Total adjustments
    
    
    (119,728,115
    )
    
    
    80,723,086
    
    
    
    (73,733,549
    )Net cash (used in) provided by operating activities
    
    
    (106,355,765
    )
    
    
    110,573,566
    
    
    
    (64,032,670
    )Cash flows from investing activities:Fixed maturities acquired
    
    
    (23,946,795
    )
    
    
    (313,966,624
    )
    
    
    (247,136,021
    )Limited partnerships acquired
    
    
    (43,750,000
    )
    
    
    (55,570,000
    )
    
    
    (17,350,000
    )Fixed maturities sold
    
    
    179,432,179
    
    
    
    220,876,103
    
    
    
    97,941,993Limited partnerships sold
    
    
    50,763,951
    
    
    
    55,905,244
    
    
    
    85,839,946Net sale (purchase) of short-term investments
    
    
    136,671,984
    
    
    
    (56,575,517
    )
    
    
    219,023,303Fixed maturities matured
    
    
    2,081,000
    
    
    
    15,845,000
    
    
    
    8,448,000Receivable for securities sold and not yet settled
    
    
    (4,080,290
    )
    
    
    34,206,452
    
    
    
    (47,944,697
    )Acquisition of property & equipment, net
    
    
    (1,478,683
    )
    
    
    (2,660,398
    )
    
    
    (3,846,538
    )Payable for securities purchased and not yet settled
    
    
    
    
    
    
    (9,000,000
    )
    
    
    9,000,000Deconsolidation of investment in Tricadia limited partnership
    
    
    
    
    
    
    (6,940,528
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    295,693,346
    
    
    
    (117,880,268
    )
    
    
    103,975,986Cash flows from financing activities:Proceeds from stock issuance and other
    
    
    5,259,390
    
    
    
    3,626,463
    
    
    
    1,981,601Cash dividends paid to stockholders
    
    
    (2,852,228
    )
    
    
    (2,465,648
    )
    
    
    (2,154,947
    )Net purchase of treasury stock
    
    
    (7,121,988
    )
    
    
    
    
    
    
    (27,099,828
    )Payable for treasury stock purchased and not yet settled
    
    
    1,911,187
    
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (2,803,639
    )
    
    
    1,160,815
    
    
    
    (27,273,174
    )Net increase
(decrease) in cash and cash equivalents
    
    
    186,533,942
    
    
    
    (6,145,887
    )
    
    
    12,670,142Cash and
cash equivalents at beginning of year
    
    
    18,379,401
    
    
    
    24,525,288
    
    
    
    11,855,146Cash and
cash equivalents at end of year
    
    $
    204,913,343
    
    
    $
    18,379,401
    
    
    $
    24,525,288
  F-8




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##### Table of Contents



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




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##### Table of Contents



Basis of reporting
   Consolidation
  Investments
      F-10




---



##### Table of Contents



Derivatives
  Premium and policy acquisition cost recognition
  Revenue recognition
  Reinsurance
    Depreciation
  Income taxes
  Fair values of financial instruments
  F-11




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##### Table of Contents



Incurred losses
  Debt issuance costs
  Share-based compensation
 Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 Share-Based Payment
 Basic and diluted earnings per share
  Reclassification
  Effects of recent accounting pronouncements
 Accounting for Uncertainty in Income Taxes
 Fair Value Measurements
 F-12




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##### Table of Contents



The Fair Value Option for Financial Assets and
Financial Liabilities
 Accounting for Income
Tax Benefits of Dividends on Share-Based Payment Awards
   F-13




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##### Table of Contents



(2) Investments:
  December 31, 2007
    
    Percent
    
    December 31, 2006
    
    PercentFixed maturitiesAvailable for Sale (Fair Value):U.S. Treasury securities
    
    $
    14,335,541
    
    
    
    2.04
    %
    
    $
    11,042,269
    
    
    
    1.66
    %Municipal obligations
    
    
    7,810,318
    
    
    
    1.11
    %
    
    
    7,802,878
    
    
    
    1.17
    %Corporate securities
    
    
    5,853,942
    
    
    
    0.83
    %
    
    
    12,138,485
    
    
    
    1.83
    %Mortgage-backed securities
    
    
    134,890,799
    
    
    
    19.25
    %
    
    
    296,582,893
    
    
    
    44.61
    %Subtotal
    
    $
    162,890,600
    
    
    
    23.23
    %
    
    $
    327,566,525
    
    
    
    49.27
    %Trading (Fair Value):Municipal obligations
    
    
    70,243,560
    
    
    
    10.02
    %
    
    
    
    
    
    
    Commercial middle market debt
    
    
    8,293,725
    
    
    
    1.18
    %
    
    
    
    
    
    
    Total fixed maturities
    
    $
    241,427,885
    
    
    
    34.43
    %
    
    $
    327,566,525
    
    
    
    49.27
    %Equity securities trading (Fair Value):Preferred stock
    
    
    66,325,265
    
    
    
    9.46
    %
    
    
    
    
    
    
    Cash and short-term investments (at Cost)
    
    
    205,078,343
    
    
    
    29.25
    %
    
    
    154,980,856
    
    
    
    23.31
    %Total fixed maturities, equity securities,
cash and short-term investments
    
    $
    512,831,493
    
    
    
    73.14
    %
    
    $
    482,547,381
    
    
    
    72.58
    %Limited partnership hedge funds (at Equity)
    
    
    188,295,547
    
    
    
    26.86
    %
    
    
    182,324,313
    
    
    
    27.42
    %Total investment portfolio
    
    $
    701,127,040
    
    
    
    100.00
    %
    
    $
    664,871,694
    
    
    
    100.00
    %
  F-14




---



##### Table of Contents



Average
    
    
    AverageUnderlying
    
    
    FICOLoan to
    
    
    Credit
    
    
    Moodys
    
    
    S&PSecurity description
    
    Issue date
    
    
    Fair value
    
    
    Value % (1)
    
    
    Score (1)
    
    
    Rating
    
    
    RatingAmerican Home Mortgage Assets
    
    
    7/1/2006
    
    
    $
    20,220,609
    
    
    
    88.80
    
    
    
    706
    
    
    AAA
    
    AAABear Stearns Mortgage Funding
    
    
    9/29/2006
    
    
    
    12,921,619
    
    
    
    83.30
    
    
    
    710
    
    
    AAA
    
    AAACountrywide Alt Loan Trust A1
    
    
    11/1/2005
    
    
    
    13,001,835
    
    
    
    82.60
    
    
    
    697
    
    
    AAA
    
    AAACountrywide Alternative Loan Trust
    
    
    12/1/2005
    
    
    
    14,083,927
    
    
    
    81.70
    
    
    
    699
    
    
    AAA
    
    AAAResidential Accredit Loans, Inc.
    
    
    10/28/2005
    
    
    
    12,608,860
    
    
    
    78.70
    
    
    
    704
    
    
    AAA
    
    AAAResidential Accredit Loans, Inc.
    
    
    12/1/2005
    
    
    
    15,836,094
    
    
    
    82.50
    
    
    
    700
    
    
    AAA
    
    AAAWashington Mutual
    
    
    12/21/2005
    
    
    
    11,607,434
    
    
    
    79.10
    
    
    
    715
    
    
    AAA
    
    AAAWashington Mutual
    
    
    7/1/2006
    
    
    
    17,288,400
    
    
    
    79.20
    
    
    
    731
    
    
    AAA
    
    AAAWashington Mutual 2006-AR13 1A
    
    
    9/1/2006
    
    
    
    17,322,021
    
    
    
    76.20
    
    
    
    729
    
    
    AAA
    
    AAA$
    134,890,799
 
 (1)
    
    at issue date    2007Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueFixed maturities available for sale:U.S. Treasury securities
    
    $
    13,938,993
    
    
    $
    408,146
    
    
    $
    (11,598
    )
    
    $
    14,335,541Municipal obligations
    
    
    7,792,131
    
    
    
    18,187
    
    
    
    
    
    
    
    7,810,318Corporate securities
    
    
    5,957,603
    
    
    
    59,441
    
    
    
    (163,102
    )
    
    
    5,853,942Mortgage-backed securities
    
    
    134,890,799
    
    
    
    
    
    
    
    
    
    
    
    134,890,799Totals
    
    $
    162,579,526
    
    
    $
    485,774
    
    
    $
    (174,700
    )
    
    $
    162,890,600
 F-15




---



##### Table of Contents



2006Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueFixed maturities available for sale:U.S. Treasury securities
    
    $
    11,202,361
    
    
    $
    1,332
    
    
    $
    (161,424
    )
    
    $
    11,042,269Municipal obligations
    
    
    7,795,637
    
    
    
    7,241
    
    
    
    
    
    
    
    7,802,878Corporate securities
    
    
    12,259,960
    
    
    
    101,718
    
    
    
    (223,193
    )
    
    
    12,138,485Mortgage-backed securities
    
    
    296,174,058
    
    
    
    473,892
    
    
    
    (65,057
    )
    
    
    296,582,893Totals
    
    $
    327,432,016
    
    
    $
    584,183
    
    
    $
    (449,674
    )
    
    $
    327,566,525
  2007Less than 12 months
    
    12 months or longer
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    UnrealizedValue
    
    Loss
    
    Value
    
    Loss
    
    Value
    
    LossFixed maturities
available for sale:U.S. Treasury securities
    
    $
    
    
    
    $
    
    
    
    $
    3,829,008
    
    
    $
    (11,598
    )
    
    $
    3,829,008
    
    
    $
    (11,598
    )Corporate securities
    
    
    103,957
    
    
    
    (320
    )
    
    
    4,071,690
    
    
    
    (162,782
    )
    
    
    4,175,647
    
    
    
    (163,102
    )Total temporarily
impaired securities
    
    $
    103,957
    
    
    $
    (320
    )
    
    $
    7,900,698
    
    
    $
    (174,380
    )
    
    $
    8,004,655
    
    
    $
    (174,700
    )
 2006Less than 12 months
    
    12 months or longer
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    UnrealizedValue
    
    Loss
    
    Value
    
    Loss
    
    Value
    
    LossFixed maturities
available for sale:U.S. Treasury securities
    
    $
    6,169,093
    
    
    $
    (29,489
    )
    
    $
    4,725,591
    
    
    $
    (131,935
    )
    
    $
    10,894,684
    
    
    $
    (161,424
    )Corporate securities
    
    
    124,917,444
    
    
    
    (65,748
    )
    
    
    7,685,786
    
    
    
    (222,502
    )
    
    
    132,603,230
    
    
    
    (288,250
    )Total temporarily
impaired securities
    
    $
    131,086,537
    
    
    $
    (95,237
    )
    
    $
    12,411,377
    
    
    $
    (354,437
    )
    
    $
    143,497,914
    
    
    $
    (449,674
    )
  F-16




---



##### Table of Contents



Fixed maturities available for saleAmortized
    
    FairCost
    
    ValueDue in one year or less
    
    $
    8,399,808
    
    
    $
    8,419,400Due after one year through five years
    
    
    9,636,253
    
    
    
    10,065,204Due after five years through ten years
    
    
    1,756,258
    
    
    
    1,600,923Due after ten years
    
    
    7,896,408
    
    
    
    7,914,27427,688,727
    
    
    
    27,999,801Mortgage-backed securities
    
    
    134,890,799
    
    
    
    134,890,799Totals
    
    $
    162,579,526
    
    
    $
    162,890,600
    2007
    
    2006Total assets
    
    $
    43,637,939
    
    
    $
    28,978,975Total liabilities
    
    $
    147,307
    
    
    $
    152,686Total partners capital
    
    $
    43,490,632
    
    
    $
    28,826,289Total revenue
    
    $
    9,261,842
    
    
    $
    5,478,485Net income
    
    $
    7,977,923
    
    
    $
    4,739,308
  F-17




---



##### Table of Contents



Amount
    
    
    Ownership %Alpha Energy Partners Class A
    
    $
    1,341,625
    
    
    
    1.22Alpha Energy Partners Class C
    
    
    3,213,979
    
    
    
    2.93Alydar QP Fund
    
    
    5,078,218
    
    
    
    1.02Artesian Credit Arbitrage Total Return Fund
    
    
    5,819,630
    
    
    
    13.82Blue Harbour Strategic Value Partners, L.P.
    
    
    1,358,548
    
    
    
    0.29Brocade Fund, L.P.
    
    
    6,479,999
    
    
    
    6.94Caspian Capital Partners, L.P. (1)
    
    
    4,746,283
    
    
    
    1.35Dolphin Limited Partnership  A
    
    
    6,024,712
    
    
    
    6.92Five Mile Capital SIF
    
    
    10,256,694
    
    
    
    3.24Horizon Portfolio, L.P.
    
    
    4,357,205
    
    
    
    3.40Ivory Flagship Fund L.P.
    
    
    5,432,461
    
    
    
    0.94Latigo Fund, L.P.
    
    
    5,502,701
    
    
    
    3.26Loeb Arbitrage Fund
    
    
    4,336,776
    
    
    
    0.69Lubben Fund, L.P.
    
    
    6,017,552
    
    
    
    4.39Mariner  CRA Relative Fund (1)
    
    
    3,751,038
    
    
    
    4.48Mariner Dolphin Special Opportunities Fund (1)
    
    
    4,971,878
    
    
    
    17.59Mariner Opportunities Fund (1)
    
    
    4,685,707
    
    
    
    1.60Mariner Voyager LP (1)
    
    
    8,022,168
    
    
    
    15.29MKP Credit II, L.P.
    
    
    6,854,907
    
    
    
    5.05MV Partners Fund I, LP  Tranche B
    
    
    1,154,326
    
    
    
    1.96Newsmith Credit Fund, LP
    
    
    2,725,191
    
    
    
    9.06P.A.W. Partners, LP
    
    
    6,116,932
    
    
    
    5.40Renaissance Institutional Equities Fund, L.L.C.
    
    
    5,186,167
    
    
    
    0.05Riva Ridge Capital Partners, L.P.
    
    
    7,936,531
    
    
    
    6.50SLS Investors
    
    
    4,926,704
    
    
    
    1.88Taconic Opportunity Fund, L.P.
    
    
    1,874,438
    
    
    
    0.10TAMI Macro Fund, L.P.
    
    
    1,913,358
    
    
    
    3.80Tricadia (CDO) Fund, LP (1)
    
    
    42,594,084
    
    
    
    97.94Wexford Spectrum Fund I, LP
    
    
    15,615,735
    
    
    
    1.58Total limited partnership and limited liability company hedge funds
    
    $
    188,295,547
 
 (1)
    
    Indicates limited partnership or limited liability company hedge fund
directly managed by Mariner (see note 17).(2)
    
    In January 2008 the Company made a commitment to purchase an interest in a hedge fund in the amount of $5.0 million. F-18




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##### Table of Contents



Year ended December 31,2007
    
    2006
    
    2005Realized gains (losses) on investments:Fixed maturities
    
    $
    (7,138,381
    )
    
    $
    (384,878
    )
    
    $
    (559,952
    )Short-term investments
    
    
    235,529
    
    
    
    (17,676
    )
    
    
    (245,324
    )Net realized investment losses
    
    $
    (6,902,852
    )
    
    $
    (402,554
    )
    
    
    (805,276
    )
 Year ended December 31,2007
    
    2006
    
    2005Change in unrealized appreciation (depreciation) on investments:Fixed maturities
    
    $
    176,563
    
    
    $
    1,010,131
    
    
    $
    (2,017,718
    )Unrealized net investment gains (losses)
    
    
    176,563
    
    
    
    1,010,131
    
    
    
    (2,017,718
    )Deferred income tax (expense) benefit
    
    
    (61,799
    )
    
    
    (353,546
    )
    
    
    706,201Change in unrealized net investment gains (losses), net of
deferred income taxes
    
    $
    114,764
    
    
    $
    656,585
    
    
    
    (1,311,517
    )
  Year ended December 31,2007
    
    2006
    
    2005Fixed maturities available for sale
    
    $
    13,944,630
    
    
    $
    11,793,544
    
    
    $
    7,796,371Trading securities
    
    
    2,302,469
    
    
    
    15,785,074
    
    
    
    8,486,160Short-term investments
    
    
    8,687,536
    
    
    
    7,816,937
    
    
    
    6,161,702Equity in earnings of limited partnerships
    
    
    12,985,185
    
    
    
    16,474,691
    
    
    
    17,603,357Total investment income
    
    
    37,919,820
    
    
    
    51,870,246
    
    
    
    40,047,590Investment expenses (see note 17)
    
    
    (2,430,451
    )
    
    
    (3,973,022
    )
    
    
    (3,987,779
    )Net investment income
    
    $
    35,489,369
    
    
    $
    47,897,224
    
    
    $
    36,059,811
  F-19




---



##### Table of Contents



Margin Account
  Securities Lending
  General
    F-20




---



##### Table of Contents



(3) Fiduciary Funds:
   (Unaudited)2007
    
    
    2006Cash and short-term investments
    
    $
    7,690,777
    
    
    $
    16,468,618Premiums receivable
    
    
    23,646,503
    
    
    
    25,758,823Reinsurance and other receivables
    
    
    95,577,799
    
    
    
    98,249,798Total assets
    
    $
    126,915,079
    
    
    $
    140,477,239Due to insurance pool members
    
    
    66,215,850
    
    
    
    59,305,829Reinsurance payable
    
    
    27,299,729
    
    
    
    44,424,500Funds withheld from reinsurers
    
    
    30,487,673
    
    
    
    33,011,209Other liabilities
    
    
    2,911,827
    
    
    
    3,735,701Total liabilities
    
    $
    126,915,079
    
    
    $
    140,477,239
  (4) Insurance Operations:
 Reinsurance transactions
      F-21




---



##### Table of Contents



Reinsurer
    
    Amounts
    
    
    A.M. Best Rating(in millions)Lloyds Syndicates
    
    $
    61.3
    
    
    A (Excellent)Swiss Reinsurance America Corp.
    
    
    27.4
    
    
    A+ (Superior)Lloyds (Equitas)
    
    
    11.5
    
    
    NR-3 (Rating Procedure Inapplicable)Platinum Underwriters Reinsurance Co.
    
    
    8.3
    
    
    A (Excellent)Folksamerica Reinsurance Company
    
    
    6.6
    
    
    A- (Excellent)XL Reinsurance America Inc.
    
    
    5.8
    
    
    A+ (Superior)Liberty Mutual Insurance Company
    
    
    5.3
    
    
    A (Excellent)Transatlantic Reins. Co.
    
    
    5.1
    
    
    A+ (Superior)FM Global (Arkwright)
    
    
    4.8
    
    
    A+ (Superior)Berkley Insurance Company
    
    
    3.8
    
    
    A+ (Superior)General Reins. Corp.
    
    
    3.7
    
    
    A++ (Superior)Axis Reins. Co.
    
    
    3.6
    
    
    A (Excellent)Everest Reinsurance
    
    
    2.6
    
    
    A+ (Superior)Munich Reinsurance America
    
    
    2.3
    
    
    A+ (Superior)Total
    
    $
    152.1
       Gross
    
    Ceded
    
    Assumed
    
    
    
    
    
    Percentage(direct)
    
    to other
    
    from other
    
    
    
    
    
    of assumedYear ended
    
    Amount
    
    companies
    
    companies
    
    Net amount
    
    to netDecember 31, 2007
    
    $
    219,599,494
    
    
    $
    60,534,715
    
    
    $
    8,788,527
    
    
    $
    167,853,306
    
    
    
    5
    %December 31, 2006
    
    
    230,779,540
    
    
    
    86,449,224
    
    
    
    10,529,662
    
    
    
    154,859,978
    
    
    
    7
    %December 31, 2005
    
    
    186,734,330
    
    
    
    66,478,291
    
    
    
    13,635,490
    
    
    
    133,891,529
    
    
    
    10
    %
 F-22




---



##### Table of Contents



Gross
    
    Ceded
    
    Assumed
    
    
    
    
    
    Percentage(direct)
    
    to other
    
    from other
    
    
    
    
    
    of assumedYear ended
    
    Amount
    
    Companies
    
    companies
    
    Net amount
    
    to netDecember 31, 2007
    
    $
    225,002,917
    
    
    $
    68,364,479
    
    
    $
    9,457,433
    
    
    $
    166,095,871
    
    
    
    6
    %December 31, 2006
    
    
    216,737,670
    
    
    
    79,063,222
    
    
    
    14,159,693
    
    
    
    151,834,141
    
    
    
    9
    %December 31, 2005
    
    
    178,807,549
    
    
    
    65,663,023
    
    
    
    21,412,678
    
    
    
    134,557,204
    
    
    
    16
    %
  Unpaid losses
  Year ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Net liability for losses and loss adjustment expenses at beginning of year
    
    $
    292,941
    
    
    $
    289,217
    
    
    $
    255,479Provision for losses and loss adjustment expenses occurring in current year
    
    
    103,664
    
    
    
    93,803
    
    
    
    105,537Decrease in estimated losses and loss adjustment expenses for claims
occurring in prior years (1)
    
    
    (13,820
    )
    
    
    (7,667
    )
    
    
    (13,247
    )Net loss and loss adjustment expenses incurred
    
    
    89,844
    
    
    
    86,136
    
    
    
    92,290Less:Losses and loss adjustment expense payments for claims occurring during:Current year
    
    
    12,136
    
    
    
    9,641
    
    
    
    15,453Prior years
    
    
    64,244
    
    
    
    72,771
    
    
    
    43,09976,380
    
    
    
    82,412
    
    
    
    58,552Net liability for losses and loss adjustment expenses at year end
    
    
    306,405
    
    
    
    292,941
    
    
    
    289,217Ceded unpaid losses and loss adjustment expenses at year end
    
    
    250,130
    
    
    
    286,238
    
    
    
    299,648Gross unpaid losses and loss adjustment expenses at year end
    
    $
    556,535
    
    
    $
    579,179
    
    
    $
    588,865
 
 (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 $13.8 million decrease in 2007 was largely caused by favorable
development in the 2003-2005 accident years for the ocean marine line,
which generally resulted from favorable loss trends in the risk class.
Another factor contributing to the decrease was $6.2 million recorded
on the novation of excess workers compensation policies in the other
liability line for accident years 2004-2006,which was partially offset
by adverse development of $3.0 million in the professional liability
class as a result of two large claims in the 2006 accident year. The
inland marine/fire segment also reported favorable loss development
partially due to lower reported severity losses. The favorable
development in 2007 was partially offset by approximately $3.3 million
in adverse development from the runoff aviation class.The $7.7 million decrease in 2006 primarily reflected favorable
development in the 2005 and 2004 accident years in ocean marine due in
part to lower settlements of case reserve estimates, higher than
expected receipts of salvage and subrogation recoveries and a lower
emergence of actual versus expected losses. Partially offsetting this
benefit was adverse development in the 2005 and 2004 accident years in
both of the commercial auto and surety classes as a result of higher
than initially anticipated loss ratios. 2004 was the first full year
of writing commercial auto and surety premiums.The $13.2 million decrease in 2005 primarily reflected the recognition
of favorable development in the ocean marine line of business,
particularly in the 2001 to 2003 accident years. The Companys net
loss retention per risk, or occurrence, increased substantially in the
ocean marine line during the 2001-2003 accident years from previous
years. F-23




---



##### Table of Contents



Our net loss retentions in the ocean marine line of business for the 1998, 1999
and 2000 years were $50,000, $50,000 and $100,000, respectively. This compared
to net loss retentions in the ocean marine line of business for the 2001, 2002
and 2003 years of $1,500,000, $2,000,000 and $2,000,000, respectively. The
Company estimated higher IBNR amounts in the 2001 to 2003 accident years to
correspond to the larger net loss retentions. Our subsequent analysis of our
2004 actual loss development, however, indicated a trend, which continued in
2005, that the actual loss emergence for the larger net retention years of 2001
to 2003 was not developing as we had originally anticipated. These results
compared favorably with those obtained through a statistical evaluation of
losses using the Bornheutter-Ferguson, paid and incurred methods. 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. Further contributing to
the increase was the 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.     F-24




---



##### Table of Contents



Salvage and subrogation
  Deferred policy acquisition costs
  (5) Property, Improvements and Equipment, Net:
  2007
    
    2006Office furniture and equipment
    
    $
    1,706,122
    
    
    $
    1,653,875Computer equipment
    
    
    1,604,437
    
    
    
    986,205Computer software
    
    
    1,245,014
    
    
    
    6,000,273Leasehold improvements
    
    
    3,695,764
    
    
    
    3,679,4448,251,337
    
    
    
    12,319,797Less: accumulated depreciation and amortization
    
    
    (3,434,501
    )
    
    
    (2,369,827
    )Property, improvements and equipment, net
    
    $
    4,816,836
    
    
    $
    9,949,970
  Accounting for the Impairment or Disposal of Long-Lived Assets.
 F-25




---



##### Table of Contents



(6) Income Taxes:
  December 31, 2007
    
    December 31, 2006Deferred Tax Assets:Loss reserves
    
    $
    13,106,353
    
    
    $
    12,037,171Unearned premiums
    
    
    4,607,948
    
    
    
    4,484,928State and local tax loss carryforwards
    
    
    4,589,456
    
    
    
    4,139,451Bad debt reserve
    
    
    564,356
    
    
    
    956,729Unrealized depreciation of investments
    
    
    2,531,762
    
    
    
    75,325Deferred compensation
    
    
    3,058,090
    
    
    
    914,863Other
    
    
    251,237
    
    
    
    168,524Deferred tax assets
    
    
    28,709,202
    
    
    
    22,776,991Less: Valuation allowance
    
    
    4,998,520
    
    
    
    4,193,440Total deferred tax assets
    
    
    23,710,682
    
    
    
    18,583,551Deferred Tax Liabilities:Deferred policy acquisition costs
    
    
    5,246,355
    
    
    
    4,680,071Hedge fund income
    
    
    3,339,644
    
    
    
    2,397,529Accrued salvage and subrogation
    
    
    238,882
    
    
    
    242,688Other
    
    
    442,126
    
    
    
    484,303Total deferred tax liabilities
    
    
    9,267,007
    
    
    
    7,804,591Net deferred tax assets
    
    $
    14,443,675
    
    
    $
    10,778,960
   December 31, 2007
    
    December 31, 2006
    
    December 31, 2005Balance, beginning of year
    
    $
    4,193,440
    
    
    $
    4,176,558
    
    
    $
    3,790,355Change in valuation allowance
    
    
    805,080
    
    
    
    16,882
    
    
    
    386,203Balance, end of period
    
    $
    4,998,520
    
    
    $
    4,193,440
    
    
    $
    4,176,558
   F-26




---



##### Table of Contents



Year ended December 31,2007
    
    2006
    
    2005Income taxes at the Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Tax exempt interest and dividend received deduction
    
    
    (1.1
    )
    
    
    (0.2
    )
    
    
    (0.5
    )Valuation allowance
    
    
    4.0
    
    
    
    0.0
    
    
    
    2.6State taxes
    
    
    (4.1
    )
    
    
    (1.0
    )
    
    
    (2.0
    )Other, net
    
    
    (0.1
    )
    
    
    (0.3
    )
    
    
    (1.1
    )Income tax provisions
    
    
    33.7
    %
    
    
    33.5
    %
    
    
    34.0
    %
    (7) Statutory Income and Surplus:
   Combined
    
    Combined
    
    DividendsStatutory
    
    Statutory
    
    DeclaredYear ended
    
    Net Income
    
    Surplus
    
    To ParentDecember 31,
2007 (unaudited)
    
    $
    21,583,000
    
    
    $
    203,162,000
    
    
    $
    15,745,000December 31, 2006
    
    $
    28,880,000
    
    
    $
    197,289,000
    
    
    $
    17,600,000December 31, 2005
    
    $
    5,679,000
    
    
    $
    186,848,000
    
    
    $
    8,500,000
   (8) Employee Retirement Plans:
  F-27




---



##### Table of Contents



(9) Debt:
    (10) Commitments:
   Amount2008
    
    
    3,619,5902009
    
    
    4,175,8692010
    
    
    4,136,3842011
    
    
    4,107,2692012
    
    
    4,145,790Thereafter
    
    
    15,399,839Total
    
    $
    35,584,741
     F-28




---



##### Table of Contents



(11) Comprehensive Income:
  Year ended December 31,2007
    
    2006
    
    2005Net income
    
    $
    13,372,350
    
    
    $
    29,850,480
    
    
    $
    9,700,879Other comprehensive income (loss), net of deferred taxes:Unrealized holding (losses) gains on securities, net
of deferred tax (benefit) expense of $(2,354,199),
$212,652 and $(988,048)
    
    
    (4,372,090
    )
    
    
    394,925
    
    
    
    (1,834,946
    )Less: reclassification adjustment for losses
realized in net income, net of tax benefit of
$2,415,998, $140,894 and $281,847
    
    
    (4,486,854
    )
    
    
    (261,660
    )
    
    
    (523,429
    )Other comprehensive income (loss)
    
    
    114,764
    
    
    
    656,585
    
    
    
    (1,311,517
    )Comprehensive income
    
    $
    13,487,114
    
    
    $
    30,507,065
    
    
    $
    8,389,362
  (12) Common Stock Repurchase Plan and Shareholders Equity:
      F-29




---



##### Table of Contents



(13) Earnings per share:
  December 31, 2007
    
    
    December 31, 2006
    
    
    December 31, 2005Weighted
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageNet
    
    
    Shares
    
    
    
    
    
    
    Net
    
    
    Shares
    
    
    
    
    
    
    Net
    
    
    SharesIncome
    
    
    Outstanding
    
    
    Per
    
    
    Income
    
    
    Outstanding
    
    
    Per
    
    
    Income
    
    
    Outstanding
    
    
    Per(Numerator)
    
    
    (Denominator)
    
    
    Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Share(In thousands, except for per share data)Basic EPS
    
    $
    13,372
    
    
    
    8,896
    
    
    $
    1.50
    
    
    $
    29,850
    
    
    
    8,807
    
    
    $
    3.39
    
    
    $
    9,701
    
    
    
    8,734
    
    
    $
    1.11Effect of dilutive
securities:Equity awards and
purchased options
    
    
    
    
    
    
    294
    
    
    $
    (.04
    )
    
    
    
    
    
    
    370
    
    
    $
    (.14
    )
    
    
    
    
    
    
    184
    
    
    $
    (.02
    )Diluted EPS
    
    $
    13,372
    
    
    
    9,190
    
    
    $
    1.46
    
    
    $
    29,850
    
    
    
    9,177
    
    
    $
    3.25
    
    
    $
    9,701
    
    
    
    8,918
    
    
    $
    1.09
 (14) Incentive Compensation:
 Share-based Plans:
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  F-30




---



##### Table of Contents



Net income, as reported
    
    $
    9,700,879Add: Stock-based employee compensation expense
included in reported net income, net of
related tax effects
    
    
    26,000Deduct: Total stock-based employee
compensation expense determined under the fair
value based method for all awards, net of
related tax effects
    
    
    (336,000
    )Pro forma net income
    
    $
    9,390,879Earnings per share:Basic EPS  as reported
    
    $
    1.11Basic EPS  pro forma
    
    $
    1.08Diluted EPS  as reported
    
    $
    1.09Diluted EPS  pro forma
    
    $
    1.05
  2004 Long-Term Incentive Plan
   F-31




---



##### Table of Contents



December 31, 2007
    
    December 31, 2006
    
    December 31, 2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage Grant
    
    
    
    
    
    Average Grant
    
    
    
    
    
    Average GrantDate Fair
    
    
    
    
    
    Date Fair
    
    
    
    
    
    Date FairNumber of
    
    Value
    
    Number of
    
    Value
    
    Number of
    
    ValueRSUs
    
    Shares
    
    Per Share
    
    Shares
    
    Per Share
    
    Shares
    
    Per ShareOutstanding, beginning
of year
    
    
    156,600
    
    
    $
    25.92
    
    
    
    127,000
    
    
    $
    24.70
    
    
    
    
    
    
    
    Granted
    
    
    46,000
    
    
    $
    39.13
    
    
    
    48,000
    
    
    $
    29.74
    
    
    
    127,000
    
    
    $
    24.70Vested and Converted to
Shares of Common Stock
    
    
    (19,400
    )
    
    $
    29.74
    
    
    
    (18,400
    )
    
    $
    27.49
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of year
    
    
    183,200
    
    
    $
    28.83
    
    
    
    156,600
    
    
    $
    25.92
    
    
    
    127,000
    
    
    $
    24.70Nonvested, end of year
    
    
    133,200
    
    
    $
    29.84
    
    
    
    136,600
    
    
    $
    26.10
    
    
    
    127,000
    
    
    $
    24.70
    F-32




---



##### Table of Contents



1991 and 2002 Stock Option Plans
    December 31, 2007
    
    December 31, 2006
    
    December 31, 2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseNumber of
    
    Price
    
    Number of
    
    Price
    
    Number of
    
    PriceShares Under Option
    
    Shares
    
    Per Share
    
    Shares
    
    Per Share
    
    Shares
    
    Per ShareOutstanding, beginning
of year
    
    
    333,200
    
    
    $
    15.43
    
    
    
    407,850
    
    
    $
    15.26
    
    
    
    468,500
    
    
    $
    15.19Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (136,725
    )
    
    $
    15.07
    
    
    
    (72,025
    )
    
    $
    14.46
    
    
    
    (59,050
    )
    
    $
    15.02Forfeited
    
    
    (650
    )
    
    $
    14.47
    
    
    
    (2,625
    )
    
    $
    14.47
    
    
    
    (1,600
    )
    
    $
    14.47Outstanding, end of year
    
    
    195,825
    
    
    $
    15.69
    
    
    
    333,200
    
    
    $
    15.43
    
    
    
    407,850
    
    
    $
    15.26Exercisable, end of year
    
    
    193,325
    
    
    $
    15.56
    
    
    
    323,200
    
    
    $
    15.22
    
    
    
    285,100
    
    
    $
    15.12
  Other Plans:
 Employee Stock Purchase Plan
  F-33




---



##### Table of Contents



Phantom Stock Plan
  Executive Compensation Agreements:
     F-34




---



##### Table of Contents



(15) Segment Information:
     Year ended December 31,2007
    
    2006
    
    2005(in thousands)Income
    
    
    
    
    
    Income
    
    
    
    
    
    IncomeSegments
    
    Revenues
    
    (Loss)
    
    Revenues
    
    (Loss)
    
    Revenues
    
    (Loss)Ocean marine
    
    $
    71,998
    
    
    $
    29,141
    
    
    $
    78,898
    
    
    $
    31,691
    
    
    $
    72,326
    
    
    $
    8,491Inland marine/Fire
    
    
    7,016
    
    
    
    1,084
    
    
    
    7,792
    
    
    
    (53
    )
    
    
    7,295
    
    
    
    1,454Other liability
    
    
    87,388
    
    
    
    11,971
    
    
    
    65,402
    
    
    
    3,721
    
    
    
    55,277
    
    
    
    815Aircraft
    
    
    108
    
    
    
    (3,225
    )
    
    
    284
    
    
    
    (455
    )
    
    
    857
    
    
    
    2,214Subtotal
    
    
    166,510
    
    
    
    38,971
    
    
    
    152,376
    
    
    
    34,904
    
    
    
    135,755
    
    
    
    12,974Other income (loss)
    
    
    (4,659
    )
    
    
    (4,659
    )
    
    
    596
    
    
    
    596
    
    
    
    334
    
    
    
    334Net investment income
    
    
    35,489
    
    
    
    35,489
    
    
    
    47,897
    
    
    
    47,897
    
    
    
    36,060
    
    
    
    36,060Net realized
investment (losses)
    
    
    (6,903
    )
    
    
    (6,903
    )
    
    
    (403
    )
    
    
    (403
    )
    
    
    (805
    )
    
    
    (805
    )General and
administrative
expenses
    
    
    
    
    
    
    (36,018
    )
    
    
    
    
    
    
    (31,401
    )
    
    
    
    
    
    
    (27,183
    )Interest expense
    
    
    
    
    
    
    (6,726
    )
    
    
    
    
    
    
    (6,712
    )
    
    
    
    
    
    
    (6,679
    )Income tax expense
    
    
    
    
    
    
    (6,782
    )
    
    
    
    
    
    
    (15,031
    )
    
    
    
    
    
    
    (5,000
    )Total
    
    $
    190,437
    
    
    $
    13,372
    
    
    $
    200,466
    
    
    $
    29,850
    
    
    $
    171,344
    
    
    $
    9,701
 F-35




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##### Table of Contents



2007
    
    2006
    
    2005(in thousands)United States
    
    $
    216,417
    
    
    $
    226,352
    
    
    $
    185,161Europe
    
    
    5,659
    
    
    
    9,084
    
    
    
    9,853Asia
    
    
    1,751
    
    
    
    2,647
    
    
    
    2,931Latin America
    
    
    313
    
    
    
    479
    
    
    
    879Other
    
    
    4,248
    
    
    
    2,747
    
    
    
    1,546Total Gross Written Premiums
    
    $
    228,388
    
    
    $
    241,309
    
    
    $
    200,370
 (16) Quarterly Financial Data (unaudited):
  Three Months EndedMarch 31,
    
    June 30,
    
    Sept. 30,
    
    Dec. 31,2007
    
    2007
    
    2007
    
    2007(in thousands, except per share data)Total revenues
    
    $
    52,101
    
    
    $
    52,558
    
    
    $
    48,963
    
    
    $
    36,815Income before income taxes
    
    $
    11,556
    
    
    $
    15,904
    
    
    $
    5,751
    
    
    $
    (13,056
    )Net income
    
    $
    7,519
    
    
    $
    10,325
    
    
    $
    3,799
    
    
    $
    (8,270
    )Basic earnings per share
    
    $
    .85
    
    
    $
    1.16
    
    
    $
    .43
    
    
    $
    (.93
    )Diluted earnings per share
    
    $
    .82
    
    
    $
    1.12
    
    
    $
    .41
    
    
    $
    (.93
    )
 Three Months EndedMarch 31,
    
    June 30,
    
    Sept. 30,
    
    Dec. 31,2006
    
    2006
    
    2006
    
    2006(in thousands, except per share data)Total revenues
    
    $
    49,542
    
    
    $
    48,883
    
    
    $
    48,394
    
    
    $
    53,648Income before income taxes
    
    $
    11,859
    
    
    $
    9,442
    
    
    $
    12,406
    
    
    $
    11,174Net income
    
    $
    7,714
    
    
    $
    6,147
    
    
    $
    8,578
    
    
    $
    7,411Basic earnings per share
    
    $
    .88
    
    
    $
    .70
    
    
    $
    .97
    
    
    $
    .84Diluted earnings per share
    
    $
    .85
    
    
    $
    .67
    
    
    $
    .93
    
    
    $
    .80
 (17) Related Party Transactions:
   F-36




---



##### Table of Contents



(18) Legal Proceedings:
  F-37




---



##### Table of Contents



FINANCIAL STATEMENT SCHEDULES
 
 SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
 NYMAGIC, INC.
 Balance Sheets
  December 31,
    
    
    December 31,2007
    
    
    2006Assets:Cash
    
    $
    65,597,032
    
    
    $
    878,947Investments
    
    
    54,766,256
    
    
    
    105,425,534Total cash and investments
    
    
    120,363,288
    
    
    
    106,304,481Investment in subsidiaries
    
    
    237,489,115
    
    
    
    238,810,495Due from subsidiaries
    
    
    18,700,906
    
    
    
    20,983,782Other assets
    
    
    6,423,519
    
    
    
    7,057,719Total assets
    
    $
    382,976,828
    
    
    $
    373,156,477Liabilities:Notes payable
    
    $
    100,000,000
    
    
    $
    100,000,000Dividend payable
    
    
    815,267
    
    
    
    788,980Other liabilities
    
    
    2,716,014
    
    
    
    1,667,951Total liabilities
    
    
    103,531,281
    
    
    
    102,456,931Shareholders equity:Common stock
    
    
    15,672,090
    
    
    
    15,505,815Paid-in capital
    
    
    47,313,015
    
    
    
    42,219,900Accumulated other comprehensive income
    
    
    202,196
    
    
    
    87,432Retained earnings
    
    
    296,641,235
    
    
    
    286,147,400Treasury stock
    
    
    (80,382,989
    )
    
    
    (73,261,001
    )Total shareholders equity
    
    
    279,445,547
    
    
    
    270,699,546Total liabilities and shareholders equity
    
    $
    382,976,828
    
    
    $
    373,156,477
 F-38




---



##### Table of Contents



FINANCIAL STATEMENT SCHEDULES
SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NYMAGIC, INC.
Statements of Income
 Year ended December 31,2007
    
    
    2006
    
    
    2005Revenues:Cash dividends from subsidiaries
    
    $
    15,745,000
    
    
    $
    18,500,000
    
    
    $
    8,500,000Net investment and other income
    
    
    12,241,488
    
    
    
    7,763,602
    
    
    
    8,382,31827,986,488
    
    
    
    26,263,602
    
    
    
    16,882,318Expenses:General and administrative expenses
    
    
    6,023,143
    
    
    
    3,686,841
    
    
    
    3,090,189Interest expenses
    
    
    6,701,711
    
    
    
    6,688,932
    
    
    
    6,677,409Income tax expense (benefit)
    
    
    453,140
    
    
    
    (608,232
    )
    
    
    (494,921
    )13,177,994
    
    
    
    9,767,541
    
    
    
    9,272,677Income before equity income
    
    
    14,808,494
    
    
    
    16,496,061
    
    
    
    7,609,641Equity in undistributed earning of subsidiaries
    
    
    (1,436,144
    )
    
    
    13,354,419
    
    
    
    2,091,238Net income
    
    $
    13,372,350
    
    
    $
    29,850,480
    
    
    $
    9,700,879
 Statements of Cash Flows
 Year ended December 31,2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    13,372,350
    
    
    $
    29,850,480
    
    
    $
    9,700,879Adjustments to net income to cash provided by operating
activities:Equity in undistributed earnings of subsidiaries
    
    
    1,436,144
    
    
    
    (13,354,419
    )
    
    
    (2,091,238
    )Equity in earnings of limited partnerships
    
    
    (9,032,711
    )
    
    
    (4,986,865
    )
    
    
    (274,038
    )Decrease (increase) in due from subsidiaries
    
    
    2,282,876
    
    
    
    (5,229,654
    )
    
    
    (660,571
    )Decrease (increase) in other assets
    
    
    634,200
    
    
    
    (988,934
    )
    
    
    (195,005
    )Decrease in other liabilities
    
    
    (863,124
    )
    
    
    (124,569
    )
    
    
    (1,413,528
    )Net cash provided by operating activities
    
    
    7,829,735
    
    
    
    5,166,039
    
    
    
    5,066,499Cash flows from investing activities:Net sale (purchase) of other investments
    
    
    65,941,989
    
    
    
    (2,326,169
    )
    
    
    8,764,071Limited partnerships (acquired) sold
    
    
    (6,250,000
    )
    
    
    (40,029,555
    )
    
    
    47,403,579Decrease (increase) in receivable for securities sold
    
    
    
    
    
    
    34,735,775
    
    
    
    (32,107,756
    )Investment in subsidiary
    
    
    
    
    
    
    1,607,582
    
    
    
    Net cash provided by (used in) investing activities
    
    
    59,691,989
    
    
    
    (6,012,367
    )
    
    
    24,059,894Cash flows in financing activities:Proceeds from stock issuance and other
    
    
    5,259,390
    
    
    
    3,626,463
    
    
    
    1,981,601Cash dividends paid to stockholders
    
    
    (2,852,228
    )
    
    
    (2,465,648
    )
    
    
    (2,154,947
    )Net purchase of treasury stock
    
    
    (7,121,988
    )
    
    
    
    
    
    
    (27,099,828
    )Increase in payable for treasury stock purchased
    
    
    1,911,187
    
    
    
    
    
    
    
    Investment in subsidiary
    
    
    
    
    
    
    
    
    
    
    (1,600,000
    )Net cash (used in) provided by financing activities
    
    
    (2,803,639
    )
    
    
    1,160,815
    
    
    
    (28,873,174
    )Net increase in cash
    
    
    64,718,085
    
    
    
    314,487
    
    
    
    253,219Cash at beginning of period
    
    
    878,947
    
    
    
    564,460
    
    
    
    311,241Cash at end of period
    
    $
    65,597,032
    
    
    $
    878,947
    
    
    $
    564,460
  F-39




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##### Table of Contents



NYMAGIC, INC.
 
 SCHEDULE III  SUPPLEMENTARY INSURANCE INFORMATION
  Column A
    
    Column B
    
    Column C
    
    Column D
    
    Column E
    
    Column FOTHERFUTURE POLICY
    
    
    
    
    
    POLICYDEFERRED
    
    BENEFITS,
    
    
    
    
    
    CLAIMSPOLICY
    
    LOSSES
    
    
    
    
    
    ANDACQUISITION
    
    CLAIMS AND
    
    UNEARNED
    
    BENEFITS
    
    PREMIUMCOST
    
    LOSS EXPENSES
    
    PREMIUMS
    
    PAYABLE
    
    REVENUESEGMENTS
    
    (caption 7)
    
    (caption 13-a-1)
    
    (caption 13-a-2)
    
    (caption 13-a-3)
    
    (caption 1)2007
    
    Ocean marine
    
    $
    5,370
    
    
    $
    197,511
    
    
    $
    34,985
    
    
    
    
    
    
    $
    71,637Inland marine/Fire
    
    
    521
    
    
    
    22,693
    
    
    
    8,512
    
    
    
    
    
    
    
    6,978Other liability
    
    
    9,099
    
    
    
    211,182
    
    
    
    44,080
    
    
    
    
    
    
    
    87,373Aircraft
    
    
    
    
    
    
    125,149
    
    
    
    
    
    
    
    
    
    
    
    108Total
    
    $
    14,990
    
    
    $
    556,535
    
    
    $
    87,577
    
    
    $
    
    
    
    $
    166,0962006
    
    Ocean marine
    
    $
    5,907
    
    
    $
    212,581
    
    
    $
    38,760
    
    
    
    
    
    
    $
    78,350Inland marine/Fire
    
    
    363
    
    
    
    26,038
    
    
    
    9,514
    
    
    
    
    
    
    
    7,793Other liability
    
    
    7,102
    
    
    
    204,600
    
    
    
    45,376
    
    
    
    
    
    
    
    65,402Aircraft
    
    
    
    
    
    
    135,960
    
    
    
    
    
    
    
    
    
    
    
    289Total
    
    $
    13,372
    
    
    $
    579,179
    
    
    $
    93,650
    
    
    $
    
    
    
    $
    151,8342005
    
    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
    
    
    $
    
    
    
    $
    134,557
 Column A
    
    Column G
    
    Column H
    
    Column I
    
    Column J
    
    Column KBENEFITS,CLAIMS,
    
    AMORTIZATION OFLOSSES
    
    DEFFEREDNET
    
    AND
    
    POLICY
    
    OTHERINVESTMENT
    
    SETTLEMENT
    
    ACQUISITION
    
    OPERATING
    
    PREMIUMSINCOME
    
    EXPENSES
    
    COSTS
    
    EXPENSES
    
    WRITTENSEGMENTS
    
    (caption 2)
    
    (caption 4)2007
    
    Ocean marine
    
    
    
    
    
    $
    27,723
    
    
    $
    15,134
    
    
    
    
    
    
    $
    68,192Inland marine/Fire
    
    
    
    
    
    
    4,810
    
    
    
    1,122
    
    
    
    
    
    
    
    6,935Other liability
    
    
    
    
    
    
    53,988
    
    
    
    21,429
    
    
    
    
    
    
    
    92,618Aircraft
    
    
    
    
    
    
    3,323
    
    
    
    10
    
    
    
    
    
    
    
    108Total
    
    $
    35,489
    
    
    $
    89,844
    
    
    $
    37,695
    
    
    $
    36,018
    
    
    $
    167,8532006
    
    Ocean marine
    
    
    
    
    
    $
    31,065
    
    
    $
    16,142
    
    
    
    
    
    
    $
    75,243Inland marine/Fire
    
    
    
    
    
    
    7,036
    
    
    
    809
    
    
    
    
    
    
    
    7,097Other liability
    
    
    
    
    
    
    47,304
    
    
    
    14,377
    
    
    
    
    
    
    
    72,231Aircraft
    
    
    
    
    
    
    731
    
    
    
    8
    
    
    
    
    
    
    
    289Total
    
    $
    47,897
    
    
    $
    86,136
    
    
    $
    31,336
    
    
    $
    31,401
    
    
    $
    154,8602005
    
    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
    
    
    $
    133,892
 F-40




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##### Table of Contents



NYMAGIC, INC.
 
 SCHEDULE V-VALUATION AND QUALIFYING ACCOUNTS
 COLUMN A
    
    COLUMN B
    
    COLUMN C
    
    COLUMN D
    
    COLUMN EBalance at
    
    
    
    
    
    
    
    
    
    Balance atbeginning
    
    
    
    
    
    
    
    
    
    close ofDESCRIPTION
    
    of period
    
    Additions
    
    Deductions
    
    PeriodDecember 31, 2007
Allowance for doubtful accounts
    
    $
    14,151,028
    
    
    $
    3,679,854
    
    
    $
    (3,463,959
    )
    
    $
    14,366,923December 31, 2006
Allowance for doubtful accounts
    
    $
    17,016,018
    
    
    $
    2,958,349
    
    
    $
    (5,823,339
    )
    
    $
    14,151,028December 31, 2005
Allowance for doubtful accounts
    
    $
    12,838,007
    
    
    $
    6,639,265
    
    
    $
    (2,461,254
    )
    
    $
    17,016,018
  NYMAGIC, INC.
 
 SCHEDULE VI  SUPPLEMENTARY INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS
 (In thousands)RESERVE FORDEFERRED
    
    UNPAIDAFFILIATION
    
    POLICY
    
    CLAIMS
    
    
    
    
    
    UNEARNED
    
    NET
    
    NETWITH
    
    ACQUISITION
    
    AND CLAIMS
    
    
    
    
    
    PREMIUM
    
    EARNED
    
    INVESTMENTREGISTRANT
    
    COSTS
    
    EXPENSES
    
    DISCOUNT
    
    RESERVE
    
    PREMIUMS
    
    INCOMEDECEMBER 31, 2007
CONSOLIDATED
SUBSIDIARIES
    
    $
    14,990
    
    
    $
    556,535
    
    
    $
    
    
    
    $
    87,577
    
    
    $
    166,096
    
    
    $
    22,852DECEMBER 31, 2006
CONSOLIDATED
SUBSIDIARIES
    
    $
    13,372
    
    
    $
    579,179
    
    
    $
    
    
    
    $
    93,650
    
    
    $
    151,834
    
    
    $
    40,204DECEMBER 31, 2005
CONSOLIDATED
SUBSIDIARIES
    
    $
    11,992
    
    
    $
    588,865
    
    
    $
    
    
    
    $
    83,238
    
    
    $
    134,557
    
    
    $
    27,893
 CLAIMS AND CLAIMSEXPENSES INCURRED
    
    AMORTIZATIONRELATED TO
    
    OF DEFERREDAFFILIATION
    
    
    
    
    
    
    
    
    
    POLICY
    
    PAID CLAIMS
    
    NETWITH
    
    CURRENT
    
    PRIOR
    
    ACQUSITION
    
    AND CLAIMS
    
    PREMIUMSREGISTRANT
    
    YEAR
    
    YEARS
    
    COSTS
    
    EXPENSES
    
    WRITTENDECEMBER 31, 2007 CONSOLIDATED SUBSIDIARIES
    
    $
    103,664
    
    
    $
    (13,820
    )
    
    $
    37,695
    
    
    $
    76,380
    
    
    $
    167,853DECEMBER 31, 2006 CONSOLIDATED SUBSIDIARIES
    
    $
    93,803
    
    
    $
    (7,667
    )
    
    $
    31,336
    
    
    $
    82,412
    
    
    $
    154,860DECEMBER 31, 2005 CONSOLIDATED SUBSIDIARIES
    
    $
    105,537
    
    
    $
    (13,247
    )
    
    $
    30,491
    
    
    $
    58,552
    
    
    $
    133,892
 F-41