##### 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, 2006
 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 file 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
    
    
    28Item 1B. Unresolved Staff Comments
    
    
    32Item 2. Properties
    
    
    32Item 3. Legal Proceedings
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33PART IIItem 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    34Item 6. Selected Financial Data
    
    
    35Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    36Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    49Item 8. Financial Statements and Supplementary Data
    
    
    51Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    51Item 9A. Controls and Procedures
    
    
    51Item 9B. Other Information
    
    
    51PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    51Item 11. Executive Compensation
    
    
    52Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    52Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    52Item 14. Principal Accounting Fees and Services
    
    
    52PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    53Signatures
    
    
    57Index to Consolidated Financial Statements
    
    
    F-1EX-10.52EX-10.53EX-10.54EX-10.55EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



FORWARD  LOOKING STATEMENTS




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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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##### Table of Contents



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
  Workers Compensation
 Commercial Automobile
 Directors and Officers Liability
 Employment Practices Liability
  4




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##### Table of Contents



Aircraft insurance
   NYMAGIC Gross Premiums Written
    
    Year Ended December 31,By Segment
    
    2006
    
    
    2005
    
    
    2004(Dollars in thousands)Ocean Marine
    
    $
    104,876
    
    
    
    43
    %
    
    $
    105,628
    
    
    
    53
    %
    
    $
    104,726
    
    
    
    57
    %Inland Marine/Fire
    
    
    21,595
    
    
    
    9
    %
    
    
    25,000
    
    
    
    12
    %
    
    
    16,878
    
    
    
    9
    %Other Liability
    
    
    114,754
    
    
    
    48
    %
    
    
    69,346
    
    
    
    35
    %
    
    
    61,688
    
    
    
    34
    %Subtotal
    
    
    241,225
    
    
    
    100
    %
    
    
    199,974
    
    
    
    100
    %
    
    
    183,292
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    84
    
    
    
    
    
    
    
    396
    
    
    
    
    
    
    
    342
    
    
    
    Total
    
    $
    241,309
    
    
    
    100
    %
    
    $
    200,370
    
    
    
    100
    %
    
    $
    183,634
    
    
    
    100
    %
 NYMAGIC Net Premiums Written
    
    Year Ended December 31,By Segment
    
    2006
    
    
    2005
    
    
    2004(Dollars in thousands)Ocean Marine
    
    $
    75,243
    
    
    
    49
    %
    
    $
    70,596
    
    
    
    53
    %
    
    $
    82,689
    
    
    
    60
    %Inland Marine/Fire
    
    
    7,097
    
    
    
    4
    %
    
    
    8,452
    
    
    
    6
    %
    
    
    5,255
    
    
    
    4
    %Other Liability
    
    
    72,231
    
    
    
    47
    %
    
    
    54,592
    
    
    
    41
    %
    
    
    49,190
    
    
    
    36
    %Subtotal
    
    
    154,571
    
    
    
    100
    %
    
    
    133,640
    
    
    
    100
    %
    
    
    137,134
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    289
    
    
    
    
    
    
    
    252
    
    
    
    
    
    
    
    (6
    )
    
    
    Total
    
    $
    154,860
    
    
    
    100
    %
    
    $
    133,892
    
    
    
    100
    %
    
    $
    137,128
    
    
    
    100
    %
 Reinsurance Ceded
    5




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6




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##### Table of Contents



Reinsurer
    
    Amounts
    
    
    A.M. Best Rating(in millions)Lloyds Syndicates
    
    $
    59.2
    
    
    A (Excellent)Swiss Reinsurance America Corp.
    
    
    21.1
    
    
    A+ (Superior)Lloyds (Equitas)
    
    
    10.6
    
    
    NR-3 (Rating Procedure Inapplicable)Folksamerica Reinsurance Company
    
    
    9.9
    
    
    A (Excellent)GE Reinsurance Corp.
    
    
    8.5
    
    
    A (Excellent)Platinum Underwriters Reinsurance Co.
    
    
    8.3
    
    
    A (Excellent)XL Reinsurance America Inc.
    
    
    6.8
    
    
    A+ (Superior)Liberty Mutual Insurance Company
    
    
    5.8
    
    
    A (Excellent)FM Global (Arkwright)
    
    
    5.3
    
    
    A+ (Superior)Berkley Insurance Company
    
    
    4.5
    
    
    A (Excellent)General Reins. Corp.
    
    
    4.4
    
    
    A++ (Superior)Transatlantic Reins.
    
    
    4.2
    
    
    A+ (Superior)Everest Reinsurance
    
    
    3.9
    
    
    A+ (Superior)Total
    
    $
    152.5
        1.
    
    As of December 31, 2006 and 2005, the Company reported total ceded reinsurance payable
of $44.8 million and $35.7 million, respectively.2.
    
    As of December 31, 2006 and 2005, the Company reported total reinsurance receivables on
paid losses of $47.5 million and $28.0 million, respectively.3.
    
    As of December 31, 2006 and 2005, the Company reported total reinsurance receivables on
unpaid losses of $286.2 million and $299.6 million, respectively.
 7




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##### Table of Contents



4.
    
    As of December 31, 2006 and 2005, the Company reported prepaid reinsurance premiums of
$29.6 million and $22.2 million, respectively.
   1.
    
    For the years ended December 31, 2006, 2005 and 2004 the Company reported total ceded
premiums earned of $79.1 million, $65.7 million and $46.0 million, respectively.2.
    
    For the years ended December 31, 2006, 2005 and 2004 the Company reported ceded
incurred losses and loss adjustment expenses of $63.3 million, $90.5 million and $18.4
million, respectively.
   1.
    
    The Company made reinsurance premium payments of $77.4 million, $56.3 million and $46.8
million for the years ended December 31, 2006, 2005 and 2004, respectively.2.
    
    The Company received reinsurance collections on paid losses of $57.2 million, $25.1
million and $37.0 million for the years ended December 31, 2006, 2005 and 2004,
respectively.
  Reserves
   8




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9




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##### Table of Contents



.
     Net Loss Retention:
  Shock Losses:
  10




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##### Table of Contents



Loss Reporting Tail:
   Frequency of Losses:
  Loss Estimates:
   Catastrophe Losses:
    11




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##### Table of Contents



See
Asbestos and Environmental Reserves.
     12




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##### Table of Contents



Gross
    
    
    Net(in thousands)Ocean marine
    
    $
    212,581
    
    
    $
    118,618Inland marine/fire
    
    
    26,038
    
    
    
    8,219Other liability
    
    
    204,600
    
    
    
    132,836Aircraft
    
    
    135,960
    
    
    
    33,268Total
    
    $
    579,179
    
    
    $
    292,941
 th
   Asbestos and Environmental Reserves
    13




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##### Table of Contents



Year ended December 31,2006
    
    2005
    
    2004(in thousands)Asbestos/EnvironmentalNet unpaid losses and loss adjustment expenses
(including IBNR) at the beginning of the period
    
    $
    12,960
    
    
    $
    12,759
    
    
    $
    11,797Net incurred losses and loss adjustment expenses
    
    
    576
    
    
    
    (237
    )
    
    
    4,264Net paid loss settlements
    
    
    (945
    )
    
    
    638
    
    
    
    (3,196
    )Net loss adjustment expenses payments
(cost of administering claims)
    
    
    (369
    )
    
    
    (200
    )
    
    
    (106
    )Net unpaid losses and loss adjustment expenses
(including IBNR) at end of period
    
    $
    12,222
    
    
    $
    12,960
    
    
    $
    12,759
  Year ended December 31,2006
    
    2006
    
    2004Number of claims pending at beginning of period
    
    
    469
    
    
    
    475
    
    
    
    453Number of claims reported
    
    
    80
    
    
    
    96
    
    
    
    71Number of claims settled/dismissed or otherwise resolved
    
    
    (148
    )
    
    
    (102
    )
    
    
    (49
    )Number of claims pending at end of period
    
    
    401
    
    
    
    469
    
    
    
    475
  Other Reserves
  14




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##### Table of Contents



Loss Reserve Table
          15




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##### Table of Contents



Year Ended December 31,1996
    
    
    1997
    
    
    1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006(Dollars in thousands)Estimated Liability for Net Unpaid Losses and Loss Adjustment Expenses227,370
    
    
    
    222,335
    
    
    
    213,589
    
    
    
    196,865
    
    
    
    199,685
    
    
    
    210,953
    
    
    
    208,979
    
    
    
    242,311
    
    
    
    255,479
    
    
    
    289,217
    
    
    
    292,941Cumulative Amount of Net Losses and Loss Adjustment Expenses Paid as a Percentage of Original Estimate:1 Year Later
    
    
    
    
    
    
    17
    %
    
    
    19
    %
    
    
    20
    %
    
    
    24
    %
    
    
    28
    %
    
    
    30
    %
    
    
    8
    %
    
    
    18
    %
    
    
    17
    %
    
    
    25
    %2 Years Later
    
    
    
    
    
    
    30
    %
    
    
    32
    %
    
    
    35
    %
    
    
    39
    %
    
    
    56
    %
    
    
    30
    %
    
    
    24
    %
    
    
    27
    %
    
    
    33
    %3 Years Later
    
    
    
    
    
    
    42
    %
    
    
    43
    %
    
    
    43
    %
    
    
    53
    %
    
    
    64
    %
    
    
    41
    %
    
    
    32
    %
    
    
    38
    %4 Years Later
    
    
    
    
    
    
    51
    %
    
    
    49
    %
    
    
    51
    %
    
    
    58
    %
    
    
    70
    %
    
    
    47
    %
    
    
    43
    %5 Years Later
    
    
    
    
    
    
    56
    %
    
    
    54
    %
    
    
    55
    %
    
    
    63
    %
    
    
    72
    %
    
    
    55
    %6 Years Later
    
    
    
    
    
    
    58
    %
    
    
    57
    %
    
    
    59
    %
    
    
    64
    %
    
    
    79
    %7 Years Later
    
    
    
    
    
    
    61
    %
    
    
    61
    %
    
    
    60
    %
    
    
    70
    %8 Years Later
    
    
    
    
    
    
    64
    %
    
    
    61
    %
    
    
    65
    %9 Years Later
    
    
    
    
    
    
    64
    %
    
    
    66
    %10 Years Later
    
    
    
    
    
    
    68
    %Net Liability Re-estimated including Cumulative Net Paid Losses and Loss Adjustment Expenses as a Percentage of Original Estimate:1 Year Later
    
    
    
    
    
    
    90
    %
    
    
    91
    %
    
    
    94
    %
    
    
    96
    %
    
    
    105
    %
    
    
    102
    %
    
    
    99
    %
    
    
    94
    %
    
    
    95
    %
    
    
    97
    %2 Years Later
    
    
    
    
    
    
    87
    %
    
    
    87
    %
    
    
    87
    %
    
    
    94
    %
    
    
    108
    %
    
    
    101
    %
    
    
    94
    %
    
    
    89
    %
    
    
    90
    %3 Years Later
    
    
    
    
    
    
    85
    %
    
    
    83
    %
    
    
    84
    %
    
    
    95
    %
    
    
    104
    %
    
    
    96
    %
    
    
    90
    %
    
    
    86
    %4 Years Later
    
    
    
    
    
    
    83
    %
    
    
    81
    %
    
    
    85
    %
    
    
    91
    %
    
    
    103
    %
    
    
    94
    %
    
    
    88
    %5 Years Later
    
    
    
    
    
    
    82
    %
    
    
    81
    %
    
    
    82
    %
    
    
    92
    %
    
    
    102
    %
    
    
    92
    %6 Years Later
    
    
    
    
    
    
    82
    %
    
    
    80
    %
    
    
    83
    %
    
    
    90
    %
    
    
    102
    %7 Years Later
    
    
    
    
    
    
    80
    %
    
    
    81
    %
    
    
    82
    %
    
    
    90
    %8 Years Later
    
    
    
    
    
    
    83
    %
    
    
    81
    %
    
    
    82
    %9 Years Later
    
    
    
    
    
    
    82
    %
    
    
    81
    %10 Years Later
    
    
    
    
    
    
    82
    %Net Cumulative
    
    
    
    
    
    
    40,444
    
    
    
    42,962
    
    
    
    39,287
    
    
    
    19,606
    
    
    
    (3,260
    )
    
    
    16,119
    
    
    
    24,338
    
    
    
    34,769
    
    
    
    25,956
    
    
    
    7,667Redundancy/(Deficiency)Gross Unpaid
    
    
    
    
    
    
    411,837
    
    
    
    388,402
    
    
    
    401,584
    
    
    
    425,469
    
    
    
    411,267
    
    
    
    534,189
    
    
    
    516,002
    
    
    
    518,930
    
    
    
    503,261
    
    
    
    588,865
    
    
    
    579,179Losses and Loss Adjustment ExpensesReinsurance
    
    
    
    
    
    
    184,467
    
    
    
    166,067
    
    
    
    187,995
    
    
    
    228,604
    
    
    
    211,582
    
    
    
    323,236
    
    
    
    307,023
    
    
    
    276,619
    
    
    
    247,782
    
    
    
    299,648
    
    
    
    286,238Recoverable on Unpaid Losses and Loss Adjustment ExpensesReserve
    
    
    
    
    
    
    408,794
    
    
    
    426,603
    
    
    
    451,442
    
    
    
    464,210
    
    
    
    469,482
    
    
    
    569,905
    
    
    
    500,511
    
    
    
    482,144
    
    
    
    474,199
    
    
    
    600,679Re-estimated GrossReserve
    
    
    
    
    
    
    221,869
    
    
    
    247,230
    
    
    
    277,140
    
    
    
    286,951
    
    
    
    266,538
    
    
    
    375,071
    
    
    
    315,869
    
    
    
    274,603
    
    
    
    244,676
    
    
    
    319,129Re-estimated Reinsurance RecoverableGross Cumulative
    
    
    
    
    
    
    3,043
    
    
    
    (38,201
    )
    
    
    (49,858
    )
    
    
    (38,741
    )
    
    
    (58,215
    )
    
    
    (35,716
    )
    
    
    15,491
    
    
    
    36,786
    
    
    
    29,062
    
    
    
    (11,814
    )Redundancy/(Deficiency)
   16




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##### Table of Contents



Year ended December 31,2006
    
    
    2005
    
    
    2004(In thousands)Net liability for losses and loss adjustment
expenses at beginning of year
    
    $
    289,217
    
    
    $
    255,479
    
    
    $
    242,311Provision for losses and loss adjustment
expenses occurring in current year
    
    
    93,803
    
    
    
    105,537
    
    
    
    81,518Increase (decrease) in estimated losses and loss
adjustment expenses for claims occurring
in prior years(1)
    
    
    (7,667
    )
    
    
    (13,247
    )
    
    
    (14,960
    )Net loss and loss adjustment expenses
Incurred
    
    
    86,136
    
    
    
    92,290
    
    
    
    66,558Less:Losses and loss adjustment expense payments
for claims occurring during:Current year
    
    
    9,641
    
    
    
    15,453
    
    
    
    10,287Prior years
    
    
    72,771
    
    
    
    43,099
    
    
    
    43,10382,412
    
    
    
    58,552
    
    
    
    53,390Net liability for losses and loss adjustment
expenses at year end
    
    
    292,941
    
    
    
    289,217
    
    
    
    255,479Ceded unpaid losses and loss adjustment
expenses at year end
    
    
    286,238
    
    
    
    299,648
    
    
    
    247,782Gross unpaid losses and loss adjustment
expenses at year end
    
    $
    579,179
    
    
    $
    588,865
    
    
    $
    503,261
 
 (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 $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 17




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##### Table of Contents



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.The $15.0 million decrease in 2004 reflects favorable loss
development in the aviation line, mainly in reserves for
the terrorist attacks of September 11, 2001 on the
Pentagon and the hijacked airliner that crashed in
Pennsylvania, and in the ocean marine line of business due
to a lower than expected emergence of losses in the
1998-2001 accident years.   Year ended December 31,2006
    
    
    2005
    
    
    2004(In thousands)Net liability for losses and loss adjustment expenses
reported based on statutory accounting principles
    
    $
    275,296
    
    
    $
    267,955
    
    
    $
    240,376Liability for losses and loss adjustment expenses assumed
from two former pool members (excludes $3,379, $3,000 and $3,096 at December 31, 2006,
2005 and 2004, accounted for in the statutory liability for
losses and loss adjustment expenses)
    
    
    9,438
    
    
    
    11,609
    
    
    
    9,786Other, net
    
    
    8,207
    
    
    
    9,653
    
    
    
    5,317Net liability for losses and loss adjustment expenses reported
based on GAAP
    
    
    292,941
    
    
    
    289,217
    
    
    
    255,479Ceded liability for unpaid losses and loss adjustment expenses
    
    
    286,238
    
    
    
    299,648
    
    
    
    247,782Gross liability for unpaid losses and loss adjustment expenses
    
    $
    579,179
    
    
    $
    588,865
    
    
    $
    503,261
 Regulation
    18




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##### Table of Contents



Year ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(Dollars in thousands)Net premiums written
    
    $
    154,860
    
    
    $
    133,892
    
    
    $
    137,128
    
    
    $
    98,307
    
    
    $
    106,140Policyholders surplus
    
    
    197,289
    
    
    
    186,848
    
    
    
    181,633
    
    
    
    186,325
    
    
    
    180,394Ratio
    
    
    .78 to 1
    
    
    
    .72 to 1
    
    
    
    .75 to 1
    
    
    
    .53 to 1
    
    
    
    .59 to 1
     19




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##### Table of Contents



Investment Policy
   Liquidity Portfolio:
 Fixed Income Portfolio:
 Equity and Equity-Type Securities (Hedge Funds):
 20




---



##### Table of Contents



Liquidity Portfolio:
 Fixed Income Portfolio:
 Equity and Equity-Type Securities (Hedge Funds):
 Subsidiaries
    December 31, 2006
    
    Percent
    
    December 31, 2005
    
    PercentFixed Maturities Available for Sale (Fair Value):U.S. Treasury Securities
    
    $
    11,042,269
    
    
    
    1.66
    %
    
    $
    10,391,615
    
    
    
    1.67
    %Municipalities
    
    
    7,802,878
    
    
    
    1.18
    %
    
    
    7,804,938
    
    
    
    1.25
    %Corporate Bonds
    
    
    308,721,378
    
    
    
    46.43
    %
    
    
    231,751,734
    
    
    
    37.24
    %Subtotal
    
    $
    327,566,525
    
    
    
    49.27
    %
    
    $
    249,948,287
    
    
    
    40.16
    %Trading Securities (Fair Value)Collateralized Debt Obligations
    
    
    
    
    
    
    
    
    
    
    128,348,213
    
    
    
    20.62
    %Total Fixed Maturities and Trading Portfolio
    
    $
    327,566,525
    
    
    
    49.27
    %
    
    $
    378,296,500
    
    
    
    60.78
    %Cash and Short-term Investments (at Cost)
    
    
    154,980,856
    
    
    
    23.31
    %
    
    
    104,516,979
    
    
    
    16.79
    %Total Fixed Maturities, Cash and Short-term Investments
    
    $
    482,547,381
    
    
    
    72.58
    %
    
    $
    482,813,479
    
    
    
    77.57
    %Limited Partnership Hedge Funds (at Equity)
    
    
    182,324,313
    
    
    
    27.42
    %
    
    
    139,590,758
    
    
    
    22.43
    %Total Investment Portfolio
    
    $
    664,871,694
    
    
    
    100.00
    %
    
    $
    622,404,237
    
    
    
    100.00
    %
 21




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##### Table of Contents



Relationship with Mariner Partners, Inc.
    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
  22




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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.
 23




---



##### 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
   24




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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).
  25




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##### Table of Contents



Subsidiaries
  26




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##### Table of Contents



Competition
    Employees
  Code of Conduct and Corporate Governance Documents
   27




---



##### Table of Contents



th
 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.
  Decreases in rates or changes in terms for property and casualty insurance could reduce our net
income.
  28




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##### Table of Contents



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.
  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.
  29




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##### Table of Contents



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.
   Insurance laws and regulations restrict our ability to operate.
  30




---



##### Table of Contents



Computer system risks
  Failure to comply with insurance laws and regulations could have a material adverse effect on our
business.
  Our holding company structure could prevent us from paying dividends on our common stock.
  Because of the concentration of the ownership of, and the thin trading in, our common stock, you
may have difficulties in selling shares of our common stock.
  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.
  31




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##### Table of Contents



The voting agreement and the concentration of our stock ownership in the hands of a few
shareholders could impede a change of control and could make it more difficult to effect a change
in our management.
  
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties
  
  
 Item 3. Legal Proceedings
   32




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  33




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##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
  2006
    
    2005High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    29.99
    
    
    $
    24.30
    
    
    $
    25.10
    
    
    $
    22.11Second Quarter
    
    
    32.80
    
    
    
    27.09
    
    
    
    24.75
    
    
    
    20.24Third Quarter
    
    
    32.99
    
    
    
    27.85
    
    
    
    25.73
    
    
    
    23.02Fourth Quarter
    
    
    37.50
    
    
    
    30.28
    
    
    
    26.75
    
    
    
    23.85
  Dividend Policy
  34




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##### Table of Contents



Item 6. Selected Financial Data
   Year ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(In thousands, except per share amounts)Revenues:Net premiums earned
    
    $
    151,834
    
    
    $
    134,557
    
    
    $
    116,333
    
    
    $
    96,394
    
    
    $
    113,457Net investment income
    
    
    47,897
    
    
    
    36,060
    
    
    
    23,679
    
    
    
    22,394
    
    
    
    15,821Commission income
    
    
    542
    
    
    
    1,198
    
    
    
    461
    
    
    
    (230
    )
    
    
    1,549Net realized investment gains (losses)
    
    
    (402
    )
    
    
    (805
    )
    
    
    678
    
    
    
    550
    
    
    
    8,456Other income
    
    
    596
    
    
    
    334
    
    
    
    1,790
    
    
    
    1,688
    
    
    
    186Total revenues
    
    $
    200,467
    
    
    $
    171,344
    
    
    $
    142,941
    
    
    $
    120,796
    
    
    $
    139,469Expenses:Net losses and loss adjustment
expenses incurred
    
    $
    86,136
    
    
    $
    92,290
    
    
    $
    66,558
    
    
    $
    55,715
    
    
    $
    73,356Policy acquisition expenses
    
    
    31,336
    
    
    
    30,491
    
    
    
    25,166
    
    
    
    19,430
    
    
    
    18,899General and administrative expenses
    
    
    31,402
    
    
    
    27,183
    
    
    
    23,247
    
    
    
    19,428
    
    
    
    18,373Interest expense
    
    
    6,712
    
    
    
    6,679
    
    
    
    5,353
    
    
    
    26
    
    
    
    575Total expenses
    
    $
    155,586
    
    
    $
    156,643
    
    
    $
    120,324
    
    
    $
    94,599
    
    
    $
    111,203Income before income taxes
    
    $
    44,881
    
    
    $
    14,701
    
    
    $
    22,617
    
    
    $
    26,197
    
    
    $
    28,266Income taxes expense (benefit)Current
    
    
    16,777
    
    
    
    6,152
    
    
    
    3,835
    
    
    
    8,987
    
    
    
    (4,869
    )Deferred
    
    
    (1,746
    )
    
    
    (1,152
    )
    
    
    4,151
    
    
    
    117
    
    
    
    4,42515,031
    
    
    
    5,000
    
    
    
    7,986
    
    
    
    9,104
    
    
    
    (444
    )Net income
    
    $
    29,850
    
    
    $
    9,701
    
    
    $
    14,631
    
    
    $
    17,093
    
    
    $
    28,710BASIC EARNINGS PER SHARE:Weighted average shares outstanding
    
    
    8,807
    
    
    
    8,734
    
    
    
    9,736
    
    
    
    9,673
    
    
    
    9,277Basic earnings per share
    
    $
    3.39
    
    
    $
    1.11
    
    
    $
    1.50
    
    
    $
    1.77
    
    
    $
    3.09DILUTED EARNINGS PER SHARE:Weighted average shares outstanding
    
    
    9,177
    
    
    
    8,918
    
    
    
    9,916
    
    
    
    9,828
    
    
    
    9,309Diluted earnings per share
    
    $
    3.25
    
    
    $
    1.09
    
    
    $
    1.48
    
    
    $
    1.74
    
    
    $
    3.08Dividends declared per share
    
    $
    .30
    
    
    $
    .24
    
    
    $
    .24
    
    
    $
    .24
    
    
    $
    .00
 35




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##### Table of Contents



December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(In thousands)Total cash and investments
    
    $
    664,872
    
    
    $
    622,404
    
    
    $
    630,872
    
    
    $
    519,642
    
    
    $
    430,470Total assets
    
    
    1,119,296
    
    
    
    1,090,419
    
    
    
    997,094
    
    
    
    875,125
    
    
    
    824,007Unpaid losses and loss adjustment expenses
    
    
    579,179
    
    
    
    588,865
    
    
    
    503,261
    
    
    
    518,930
    
    
    
    516,002Notes payable
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    
    
    
    
    6,220Total shareholders equity
    
    
    270,700
    
    
    
    239,284
    
    
    
    258,118
    
    
    
    244,291
    
    
    
    220,953Book value per share
    
    $
    29.14
    
    
    $
    26.44
    
    
    $
    25.91
    
    
    $
    24.47
    
    
    $
    23.54
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Executive Overview and Highlights-2006 year
 
    
    Net income of $29.9 million or $3.25 per diluted share
    
    Gross premium growth in core lines of 21% over 2005
    
    Net investment income growth of 33% over 2005
    
    Favorable net loss reserve development reported on prior year loss reserves of $7.6 million
    
    Total cash and invested assets of $664.9 million at year end 2006
    
    Total shareholders equity of $270.7 million, or $29.14 per diluted share
    
    Formed business relationships with various program managers to produce additional
property and casualty insurance premiums
 Results of Operations
   NYMAGIC Gross Premiums WrittenBy Segment
    
    Year Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Ocean Marine
    
    $
    104,876
    
    
    
    43
    %
    
    $
    105,628
    
    
    
    53
    %
    
    $
    104,726
    
    
    
    57
    %Inland Marine/Fire
    
    
    21,595
    
    
    
    9
    %
    
    
    25,000
    
    
    
    12
    %
    
    
    16,878
    
    
    
    9
    %Other Liability
    
    
    114,754
    
    
    
    48
    %
    
    
    69,346
    
    
    
    35
    %
    
    
    61,688
    
    
    
    34
    %Subtotal
    
    
    241,225
    
    
    
    100
    %
    
    
    199,974
    
    
    
    100
    %
    
    
    183,292
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    84
    
    
    
    
    
    
    
    396
    
    
    
    
    
    
    
    342
    
    
    
    Total
    
    $
    241,309
    
    
    
    100
    %
    
    $
    200,370
    
    
    
    100
    %
    
    $
    183,634
    
    
    
    100
    %
 36




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##### Table of Contents



NYMAGIC Net Premiums WrittenBy Segment
    
    Year Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Ocean Marine
    
    $
    75,243
    
    
    
    49
    %
    
    $
    70,596
    
    
    
    53
    %
    
    $
    82,689
    
    
    
    60
    %Inland Marine/Fire
    
    
    7,097
    
    
    
    4
    %
    
    
    8,452
    
    
    
    6
    %
    
    
    5,255
    
    
    
    4
    %Other Liability
    
    
    72,231
    
    
    
    47
    %
    
    
    54,592
    
    
    
    41
    %
    
    
    49,190
    
    
    
    36
    %Subtotal
    
    
    154,571
    
    
    
    100
    %
    
    
    133,640
    
    
    
    100
    %
    
    
    137,134
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    289
    
    
    
    
    
    
    
    252
    
    
    
    
    
    
    
    (6
    )
    
    
    Total
    
    $
    154,860
    
    
    
    100
    %
    
    $
    133,892
    
    
    
    100
    %
    
    $
    137,128
    
    
    
    100
    %
 NYMAGIC Net Premiums EarnedBy Segment
    
    Year Ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in thousands)Ocean Marine
    
    $
    78,350
    
    
    
    52
    %
    
    $
    71,688
    
    
    
    53
    %
    
    $
    76,361
    
    
    
    66
    %Inland Marine/Fire
    
    
    7,793
    
    
    
    5
    %
    
    
    7,340
    
    
    
    6
    %
    
    
    4,919
    
    
    
    4
    %Other Liability
    
    
    65,402
    
    
    
    43
    %
    
    
    55,277
    
    
    
    41
    %
    
    
    35,056
    
    
    
    30
    %Subtotal
    
    
    151,545
    
    
    
    100
    %
    
    
    134,305
    
    
    
    100
    %
    
    
    116,336
    
    
    
    100
    %Run off lines (Aircraft)
    
    
    289
    
    
    
    
    
    
    
    252
    
    
    
    
    
    
    
    (3
    )
    
    
    Total
    
    $
    151,834
    
    
    
    100
    %
    
    $
    134,557
    
    
    
    100
    %
    
    $
    116,333
    
    
    
    100
    %
      37




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Year
Ended December 31, 2006 as Compared to Year Ended
December 31, 2005
            38




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39




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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
          40




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##### Table of Contents



Year Ended December 31, 2005 as Compared to Year Ended December 31, 2004
   In thousandsGross losses incurred
    
    $
    70,779Ceded losses incurred
    
    
    64,203Net losses incurred
    
    
    6,576Reinsurance reinstatement costs
    
    
    14,755Total pre-tax loss incurred
    
    
    21,331Total after-tax loss incurred
    
    
    13,865Increase in combined ratio
    
    
    15.4
    %
      41




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42




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##### Table of Contents



Years ended December 31,2005
    
    
    2004(in millions)Fixed maturities, available for sale
    
    $
    7.8
    
    
    $
    4.4Fixed maturities, trading securities
    
    
    8.5
    
    
    
    13.4Short-term investments
    
    
    6.2
    
    
    
    3.0Equity in earnings of limited partnerships
    
    
    17.6
    
    
    
    7.7Total investment income
    
    
    40.1
    
    
    
    28.5Investment expenses
    
    
    (4.0
    )
    
    
    (4.8
    )Net investment income
    
    $
    36.1
    
    
    $
    23.7
       43




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Liquidity and Capital Resources
     44




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45




---



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Off-Balance Sheet Arrangements
  46




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Contractual Obligations
  Payments Due by PeriodTotal
    
    
    Less Than
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    More Than1 Year
    
    

    
    
    
    
    
    
    
    
    5 Years(in thousands)Long-term debt obligations
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100,000Interest on debt obligations
    
    
    48,750
    
    
    
    6,500
    
    
    
    13,000
    
    
    
    13,000
    
    
    
    16,250Losses and
loss
expenses(1)
    
    
    579,179
    
    
    
    126,432
    
    
    
    159,709
    
    
    
    103,880
    
    
    
    189,158Operating lease obligations
    
    
    17,005
    
    
    
    1,790
    
    
    
    3,610
    
    
    
    3,498
    
    
    
    8,107Funding commitment(2)
    
    
    16,650
    
    
    
    16,650
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    761,584
    
    
    $
    151,372
    
    
    $
    176,319
    
    
    $
    120,378
    
    
    $
    313,515
 
 (1)
    
    Represents an estimated payout based upon historical paid loss development patterns.(2)
    
    Commitment to provide capital to Tricadia at the managers discretion. Critical accounting policies
     47




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##### Table of Contents



Effect of recent accounting pronouncements
 Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection
with modifications or Exchanges of Insurance Contracts.
 Accounting for Uncertainty in Income Taxes
 Accounting for Certain Hybrid Financial
Instruments
 48




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##### Table of Contents



Fair Value Measurements.
 Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements
 Accounting for Purchases
of Life Insurance Determining the Amount That Could Be Realized in Accordance with FASB Technical
Bulletin No. 85-4, Accounting for Purchases of Life Insurance
 Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements,
  Impact of Inflation
   
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   49




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##### Table of Contents



Future cash flows of expected principal amounts(Dollars in millions)Total
    
    
    TotalThere-
    
    
    Amortized
    
    
    Fair2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    after
    
    
    Cost
    
    
    ValueTax-exempts
    
    $
    8
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8
    
    
    $
    8Average interest rate
    
    
    3.6
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Taxables
    
    $
    3
    
    
    $
    10
    
    
    $
    3
    
    
    $
    0
    
    
    $
    6
    
    
    $
    298
    
    
    $
    320
    
    
    $
    320Average interest rate
    
    
    6.5
    %
    
    
    4.1
    %
    
    
    7.2
    %
    
    
    8.6
    %
    
    
    4.3
    %
    
    
    5.8
    %
    
    
    
    
    
    
    Total
    
    $
    11
    
    
    
    10
    
    
    $
    3
    
    
    $
    0
    
    
    $
    6
    
    
    $
    298
    
    
    $
    328
    
    
    $
    328
      50




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##### Table of Contents



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
  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
   51




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##### Table of Contents



Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Number of securitiesremaining available forNumber of securities to be
    
    
    Weighted-average
    
    
    future issuance under equityissued upon exercise of
    
    
    exercise price of
    
    
    compensation plansoutstanding options,
    
    
    outstanding options,
    
    
    (excluding securitieswarrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a))Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    526,559
    
    
    $15.43
    
    
    404,718Equity compensation
plans not approved
by security holders
    
    7,500
    
    
    
    
    
    Total
    
    534,059
    
    
    $15.09
    
    
    404,718
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  52




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##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
 (a) 1.
    
    Financial StatementsThe list of financial statements appears in the accompanying index on page F-1.2.
    
    Financial Statement SchedulesThe list of financial statement schedules appears in the accompanying index on page F-1.3.
    
    Exhibits3.1
    
    Charter of NYMAGIC, INC. (Filed as Exhibit 99.1 to the Registrants Current Report on Form 8-K filed on December
16, 2003 (Commission File No. 1-11238) and incorporated herein by reference).3.2
    
    Amended and Restated By-Laws. (Filed as Exhibit 3.3 of the Registrants Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 (Commission File No. 1-11238) and incorporated herein by reference).4.0
    
    Specimen Certificate of common stock (Filed as Exhibit 4.0 of Amendment No. 2 to the Registrants Registration
Statement No. 33-27665) and incorporated herein by reference).+10.1
    
    Restated Management Agreement dated as of January 1, 1986, by and among Mutual Marine Office, Inc. and
Arkwright-Boston Manufacturers Mutual Insurance Company, Utica Mutual Insurance Company, Lumber Mutual Insurance
Company, the Registrant and Pennsylvania National Mutual Casualty Insurance Company (Filed as Exhibit 10.2 of the
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
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
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).
 53




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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).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
 54




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##### Table of Contents





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).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).


55



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##### Table of Contents





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.*10.53
    
    2004 Amended and Restated Long-Term Incentive Plan Award Agreement, dated
January 9, 2007, by and between NYMAGIC, INC. and George R. Trumbull, III.*10.54
    
    Amendment to Employment Agreement, dated January 9, 2007, by and between A.
George Kallop and NYMAGIC, INC.*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.*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.

56



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SIGNATURES




NYMAGIC, INC.


By:
    /s/ A. George KallopA. George KallopPresident and Chief Executive Officer






Name
    
    Title
    
    Date/s/ John R. Anderson

John R. Anderson
    
    Director
    
    March 13, 2007/s/ Glenn J. Angiolillo

Glenn J. Angiolillo
    
    Director
    
    March 13, 2007/s/ John T. Baily

John T. Baily
    
    Director
    
    March 13, 2007/s/ David E. Hoffman

David E. Hoffman
    
    Director
    
    March 13, 2007/s/ A. George Kallop

A. George Kallop
    
    Director and President and Chief
Executive Officer
    
    March 13, 2007/s/ William J. Michaelcheck

William J. Michaelcheck
    
    Director
    
    March 13, 2007/s/ William D. Shaw, Jr.

William D. Shaw, Jr.
    
    Director
    
    March 13, 2007/s/ Robert G. Simses

Robert G. Simses
    
    Director
    
    March 13, 2007/s/ George R. Trumbull, III

George R. Trumbull, III
    
    Director and Chairman
    
    March 13, 2007/s/ Glenn R. Yanoff

Glenn R. Yanoff
    
    Director
    
    March 13, 2007/s/ David W. Young

David W. Young
    
    Director
    
    March 13, 2007/s/ Thomas J. Iacopelli

Thomas J. Iacopelli
    
    Principal Accounting Officer and
Chief Financial Officer
    
    March 13, 2007


57



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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
 F-1




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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
 F-2




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2006
    
    
    2005ASSETSInvestments:Fixed maturities:Available for sale at fair value
(amortized cost $327,432,016 and $250,823,908)
    
    $
    327,566,525
    
    
    $
    249,948,287Trading at fair value(cost $0 and $129,080,354)
    
    
    
    
    
    
    128,348,213Limited partnerships at equity
(cost $147,185,828 and $132,766,329)
    
    
    182,324,313
    
    
    
    139,590,758Short-term investments
    
    
    136,601,455
    
    
    
    79,991,691Cash
    
    
    18,379,401
    
    
    
    24,525,288Total cash and investments
    
    
    664,871,694
    
    
    
    622,404,237Accrued investment income
    
    
    2,033,945
    
    
    
    2,836,252Premiums and other receivables, net
    
    
    29,266,353
    
    
    
    25,332,633Receivable for securities sold
    
    
    18,805,633
    
    
    
    53,012,108Reinsurance receivables on unpaid losses, net
    
    
    286,237,546
    
    
    
    299,647,802Reinsurance receivables on paid losses, net
    
    
    47,548,369
    
    
    
    28,039,284Deferred policy acquisition costs
    
    
    13,371,632
    
    
    
    11,991,728Prepaid reinsurance premiums
    
    
    29,579,428
    
    
    
    22,193,428Deferred income taxes
    
    
    10,778,960
    
    
    
    9,386,682Property, improvements and equipment, net
    
    
    9,949,970
    
    
    
    8,258,390Other assets
    
    
    6,852,772
    
    
    
    7,316,256Total assets
    
    $
    1,119,296,302
    
    
    $
    1,090,418,800LIABILITIESUnpaid losses and loss adjustment expenses
    
    $
    579,178,634
    
    
    $
    588,865,149Reserve for unearned premiums
    
    
    93,649,827
    
    
    
    83,237,991Ceded reinsurance payable
    
    
    44,792,821
    
    
    
    35,728,345Notes payable
    
    
    100,000,000
    
    
    
    100,000,000Payable for securities purchased
    
    
    
    
    
    
    9,000,000Dividends payable
    
    
    788,980
    
    
    
    536,520Other liabilities
    
    
    30,186,494
    
    
    
    33,766,669Total liabilities
    
    
    848,596,756
    
    
    
    851,134,674SHAREHOLDERS EQUITYCommon stock
    
    
    15,505,815
    
    
    
    15,415,790Paid-in capital
    
    
    42,219,900
    
    
    
    38,683,462Accumulated other comprehensive income (loss)
    
    
    87,432
    
    
    
    (569,153
    )Retained earnings
    
    
    286,147,400
    
    
    
    259,015,028343,960,547
    
    
    
    312,545,127Treasury Stock, at cost, 6,647,377 and 6,647,377 shares
    
    
    (73,261,001
    )
    
    
    (73,261,001
    )Total shareholders equity
    
    
    270,699,546
    
    
    
    239,284,126Total liabilities and shareholders equity
    
    $
    1,119,296,302
    
    
    $
    1,090,418,800
  F-5




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##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
 Year ended December 31,2006
    
    2005
    
    2004Revenues:Net premiums earned
    
    $
    151,834,141
    
    
    $
    134,557,204
    
    
    $
    116,333,254Net investment income
    
    
    47,897,224
    
    
    
    36,059,811
    
    
    
    23,678,954Net realized investment gains (losses)
    
    
    (402,554
    )
    
    
    (805,276
    )
    
    
    677,589Commission and other income
    
    
    1,137,873
    
    
    
    1,532,756
    
    
    
    2,250,902Total revenues
    
    
    200,466,684
    
    
    
    171,344,495
    
    
    
    142,940,699Expenses:Net losses and loss adjustment expenses incurred
    
    
    86,135,655
    
    
    
    92,290,259
    
    
    
    66,558,048Policy acquisition expenses
    
    
    31,336,186
    
    
    
    30,491,014
    
    
    
    25,166,397General and administrative expenses
    
    
    31,401,429
    
    
    
    27,183,486
    
    
    
    23,246,665Interest expense
    
    
    6,712,064
    
    
    
    6,678,703
    
    
    
    5,352,775Total expenses
    
    
    155,585,334
    
    
    
    156,643,462
    
    
    
    120,323,885Income before income taxes
    
    
    44,881,350
    
    
    
    14,701,033
    
    
    
    22,616,814Income tax provision:Current
    
    
    16,776,694
    
    
    
    6,151,878
    
    
    
    3,835,416Deferred
    
    
    (1,745,824
    )
    
    
    (1,151,724
    )
    
    
    4,150,733Total income tax expense
    
    
    15,030,870
    
    
    
    5,000,154
    
    
    
    7,986,149Net income
    
    $
    29,850,480
    
    
    $
    9,700,879
    
    
    $
    14,630,665Weighted average number of shares of
common stock outstanding-basic
    
    
    8,806,928
    
    
    
    8,733,872
    
    
    
    9,736,490Basic earnings per share
    
    $
    3.39
    
    
    $
    1.11
    
    
    $
    1.50Weighted average number of shares of
common stock outstanding-diluted
    
    
    9,177,284
    
    
    
    8,918,190
    
    
    
    9,916,188Diluted earnings per share
    
    $
    3.25
    
    
    $
    1.09
    
    
    $
    1.48
  F-6




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##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Year ended December 31,2006
    
    
    2005
    
    
    2004Common stock:Balance, beginning of year
    
    $
    15,415,790
    
    
    $
    15,335,740
    
    
    $
    15,279,390Shares issued
    
    
    90,025
    
    
    
    80,050
    
    
    
    56,350Balance, end of year
    
    
    15,505,815
    
    
    
    15,415,790
    
    
    
    15,335,740Paid-in capital:Balance, beginning of year
    
    $
    38,683,462
    
    
    $
    36,781,911
    
    
    $
    35,476,566Shares issued and other
    
    
    3,536,438
    
    
    
    1,901,551
    
    
    
    1,305,345Balance, end of year
    
    
    42,219,900
    
    
    
    38,683,462
    
    
    
    36,781,911Accumulated other comprehensive income (loss):Balance, beginning of year
    
    $
    (569,153
    )
    
    $
    742,364
    
    
    $
    569,220Unrealized gain (loss) on securities,
net of reclassification adjustment
    
    
    656,585
    
    
    
    (1,311,517
    )
    
    
    173,144Other comprehensive income (loss)
    
    
    656,585
    
    
    
    (1,311,517
    )
    
    
    173,144Balance, end of year
    
    
    87,432
    
    
    
    (569,153
    )
    
    
    742,364Retained earnings:Balance, beginning of year
    
    $
    259,015,028
    
    
    $
    251,418,750
    
    
    $
    239,127,097Net income
    
    
    29,850,480
    
    
    
    9,700,879
    
    
    
    14,630,665Dividends declared
    
    
    (2,718,108
    )
    
    
    (2,104,601
    )
    
    
    (2,339,012
    )Balance, end of year
    
    
    286,147,400
    
    
    
    259,015,028
    
    
    
    251,418,750Treasury stock, at cost:Balance, beginning of year
    
    $
    (73,261,001
    )
    
    $
    (46,161,173
    )
    
    $
    (46,161,173
    )Net purchase of common stock
    
    
    
    
    
    
    (27,099,828
    )
    
    
    Balance, end of year
    
    
    (73,261,001
    )
    
    
    (73,261,001
    )
    
    
    (46,161,173
    )Total Shareholders Equity
    
    
    270,699,546
    
    
    
    239,284,126
    
    
    
    258,117,592Comprehensive income:Net income
    
    $
    29,850,480
    
    
    $
    9,700,879
    
    
    $
    14,630,665Other comprehensive income (loss)
    
    
    656,585
    
    
    
    (1,311,517
    )
    
    
    173,144Comprehensive income
    
    
    30,507,065
    
    
    
    8,389,362
    
    
    
    14,803,809Number of SharesCommon stock, par value $1 each:Issued, beginning of year
    
    
    15,415,790
    
    
    
    15,335,740
    
    
    
    15,279,390Shares issued
    
    
    90,025
    
    
    
    80,050
    
    
    
    56,350Issued, end of year
    
    
    15,505,815
    
    
    
    15,415,790
    
    
    
    15,335,740Common stock, authorized shares,
par value $1 each
    
    
    30,000,000
    
    
    
    30,000,000
    
    
    
    30,000,000Common stock, shares outstanding, end of year
    
    
    8,858,438
    
    
    
    8,768,413
    
    
    
    9,781,098Dividends declared per share
    
    $
    .30
    
    
    $
    .24
    
    
    $
    .24
  F-7




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##### Table of Contents



NYMAGIC, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    29,850,480
    
    
    $
    9,700,879
    
    
    $
    14,630,665Adjustments to reconcile net income to net cash
provided by (used in)operating activities:Provision for deferred taxes
    
    
    (1,745,824
    )
    
    
    (1,151,724
    )
    
    
    4,150,733Net realized investment (gains) losses
    
    
    402,554
    
    
    
    805,276
    
    
    
    (677,589
    )Equity in earnings of limited partnerships
    
    
    (16,474,693
    )
    
    
    (17,603,357
    )
    
    
    (7,704,358
    )Net bond amortization
    
    
    200,614
    
    
    
    (268,182
    )
    
    
    1,266,282Depreciation and other, net
    
    
    968,818
    
    
    
    705,758
    
    
    
    664,681Changes in:Premiums and other receivables
    
    
    (3,933,720
    )
    
    
    17,265,886
    
    
    
    (18,616,609
    )Reinsurance receivables paid and unpaid, net
    
    
    (6,098,829
    )
    
    
    (65,392,458
    )
    
    
    18,553,934Ceded reinsurance payable
    
    
    9,064,476
    
    
    
    10,265,504
    
    
    
    (350,054
    )Accrued investment income
    
    
    792,120
    
    
    
    (176,521
    )
    
    
    (560,090
    )Deferred policy acquisition costs
    
    
    (1,379,904
    )
    
    
    1,063,569
    
    
    
    (4,809,697
    )Prepaid reinsurance premiums
    
    
    (7,386,000
    )
    
    
    (815,271
    )
    
    
    (472,101
    )Other assets
    
    
    (1,343,180
    )
    
    
    (794,902
    )
    
    
    (536,067
    )Unpaid losses and loss adjustment expenses
    
    
    (9,686,515
    )
    
    
    85,604,011
    
    
    
    (15,668,420
    )Reserve for unearned premiums
    
    
    10,411,836
    
    
    
    149,597
    
    
    
    21,267,111Other liabilities
    
    
    (2,832,280
    )
    
    
    7,189,803
    
    
    
    11,211,172Trading portfolio activities
    
    
    109,763,613
    
    
    
    (110,580,538
    )
    
    
    43,969,274Total adjustments
    
    
    80,723,086
    
    
    
    (73,733,549
    )
    
    
    51,688,202Net cash provided by (used in) operating activities
    
    
    110,573,566
    
    
    
    (64,032,670
    )
    
    
    66,318,867Cash flows from investing activities:Fixed maturities acquired
    
    
    (313,966,624
    )
    
    
    (247,136,021
    )
    
    
    (80,380,360
    )Limited partnerships acquired
    
    
    (55,570,000
    )
    
    
    (17,350,000
    )
    
    
    (156,400,000
    )Deconsolidation of investment in Tricadia limited partnership
    
    
    (6,940,528
    )
    
    
    
    
    
    
    Fixed maturities sold
    
    
    220,876,103
    
    
    
    97,941,993
    
    
    
    55,017,140Net sale (purchase) of short-term investments
    
    
    (56,575,517
    )
    
    
    219,023,303
    
    
    
    (40,975,796
    )Fixed maturities matured
    
    
    15,845,000
    
    
    
    8,448,000
    
    
    
    5,775,000Limited partnerships sold
    
    
    55,905,244
    
    
    
    85,839,946
    
    
    
    79,061,430Receivable for securities not yet settled
    
    
    34,206,452
    
    
    
    (47,944,697
    )
    
    
    (5,067,411
    )Payable for securities not yet settled
    
    
    (9,000,000
    )
    
    
    9,000,000
    
    
    
    (8,321,250
    )Acquisition of property & equipment, net
    
    
    (2,660,398
    )
    
    
    (3,846,538
    )
    
    
    (1,844,687
    )Net cash (used in) provided by investing activities
    
    
    (117,880,268
    )
    
    
    103,975,986
    
    
    
    (153,135,934
    )Cash flows from financing activities:Proceeds from stock issuance and other
    
    
    3,626,463
    
    
    
    1,981,601
    
    
    
    1,361,695Cash dividends paid to stockholders
    
    
    (2,465,648
    )
    
    
    (2,154,947
    )
    
    
    (2,335,451
    )Net sale of treasury shares
    
    
    
    
    
    
    (27,099,828
    )
    
    
    Proceeds from borrowings
    
    
    
    
    
    
    
    
    
    
    97,705,428Net cash provided by (used in) financing activities
    
    
    1,160,815
    
    
    
    (27,273,174
    )
    
    
    96,731,672Net increase in cash
    
    
    (6,145,887
    )
    
    
    12,670,142
    
    
    
    9,914,605Cash at beginning of year
    
    
    24,525,288
    
    
    
    11,855,146
    
    
    
    1,940,541Cash at end of year
    
    $
    18,379,401
    
    
    $
    24,525,288
    
    
    $
    11,855,146
  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




---



##### Table of Contents



Basis of reporting
   Consolidation
  Investments
     Derivatives
  Premium and policy acquisition cost recognition
  F-10




---



##### Table of Contents



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




---



##### Table of Contents



Stock options
 Accounting for Stock-Based Compensation
  Year ended December 31,2005
    
    
    2004(in thousands except per share data)Net income, as reported
    
    $
    9,701
    
    
    $
    14,631Add: Stock-based employee
compensation expense included in
reported net income, net of related
tax effects
    
    
    26
    
    
    
    30Deduct: Total stock-based employee
compensation expense determined
under the fair value base method for all
awards, net of related tax effects
    
    
    (336
    )
    
    
    (354
    )Pro forma net income
    
    $
    9,391
    
    
    $
    14,307Earnings per share:Basic EPS  as reported
    
    $
    1.11
    
    
    $
    1.50Basic EPS  pro forma
    
    $
    1.08
    
    
    $
    1.47Diluted EPS  as reported
    
    $
    1.09
    
    
    $
    1.48Diluted EPS  pro forma
    
    $
    1.05
    
    
    $
    1.44
  Basic and diluted earnings per share
  Reclassification
  Effects of recent accounting pronouncements
 Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection
with modifications or Exchanges of Insurance Contracts
 F-12




---



##### Table of Contents



Accounting for Uncertainty in Income Taxes
 Accounting for Certain Hybrid Financial
Instruments
 Fair Value Measurements
 Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements
 Accounting for Purchases
of Life Insurance Determining the Amount That Could Be Realized in Accordance with FASB Technical
Bulletin
 Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements
  F-13




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##### Table of Contents



(2) Investments:
  December 31, 2006
    
    Percent
    
    December 31, 2005
    
    PercentFixed Maturities Available for Sale (Fair Value):U.S. Treasury Securities
    
    $
    11,042,269
    
    
    
    1.66
    %
    
    $
    10,391,615
    
    
    
    1.67
    %Municipalities
    
    
    7,802,878
    
    
    
    1.18
    %
    
    
    7,804,938
    
    
    
    1.25
    %Corporate Bonds
    
    
    308,721,378
    
    
    
    46.43
    %
    
    
    231,751,734
    
    
    
    37.24
    %Subtotal
    
    $
    327,566,525
    
    
    
    49.27
    %
    
    $
    249,948,287
    
    
    
    40.16
    %Trading Securities (Fair Value)Collateralized Debt Obligations
    
    
    
    
    
    
    
    
    
    
    128,348,213
    
    
    
    20.62
    %Total Fixed Maturities and Trading Portfolio
    
    $
    327,566,525
    
    
    
    49.27
    %
    
    $
    378,296,500
    
    
    
    60.78
    %Cash & Short-term Investments (at Cost)
    
    
    154,980,856
    
    
    
    23.31
    %
    
    
    104,516,979
    
    
    
    16.79
    %Total Fixed Maturities, Cash and Short-term Investments
    
    $
    482,547,381
    
    
    
    72.58
    %
    
    $
    482,813,479
    
    
    
    77.57
    %Limited Partnership Hedge Funds (at Equity)
    
    
    182,324,313
    
    
    
    27.42
    %
    
    
    139,590,758
    
    
    
    22.43
    %Total Investment Portfolio
    
    $
    664,871,694
    
    
    
    100.00
    %
    
    $
    622,404,237
    
    
    
    100.00
    %
      2006Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Faircost
    
    Gains
    
    Losses
    
    ValueFixed maturities available for sale:U.S. Treasury Securities
    
    $
    11,202,361
    
    
    $
    1,332
    
    
    $
    (161,424
    )
    
    $
    11,042,269Municipalities
    
    
    7,795,636
    
    
    
    7,241
    
    
    
    
    
    
    
    7,802,877Corporate Bonds
    
    
    308,434,019
    
    
    
    575,610
    
    
    
    (288,250
    )
    
    
    308,721,379Totals
    
    $
    327,432,016
    
    
    $
    584,183
    
    
    $
    (449,674
    )
    
    $
    327,566,525
 F-14




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##### Table of Contents



2005Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Faircost
    
    Gains
    
    Losses
    
    ValueFixed maturities available for sale:U.S. Treasury Securities
    
    $
    10,539,941
    
    
    $
    3,831
    
    
    $
    (152,157
    )
    
    $
    10,391,615Municipalities
    
    
    7,798,992
    
    
    
    8,520
    
    
    
    (2,575
    )
    
    
    7,804,937Corporate Bonds
    
    
    232,484,975
    
    
    
    248,698
    
    
    
    (981,938
    )
    
    
    231,751,735Totals
    
    $
    250,823,908
    
    
    $
    261,049
    
    
    $
    (1,136,670
    )
    
    $
    249,948,287
  2006Less than 12 months
    
    12 months or longer
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    UnrealizedValue
    
    Loss
    
    Value
    
    Loss
    
    Value
    
    LossDescription of SecuritiesU.S. Treasury Securities
    
    $
    6,169,093
    
    
    $
    (29,489
    )
    
    $
    4,725,591
    
    
    $
    (131,935
    )
    
    $
    10,894,684
    
    
    $
    (161,424
    )Corporate Bonds
    
    
    124,917,444
    
    
    
    (65,748
    )
    
    
    7,685,786
    
    
    
    (222,502
    )
    
    
    132,603,230
    
    
    
    (288,250
    )Total temporary impaired
securities
    
    $
    131,086,537
    
    
    $
    (95,237
    )
    
    $
    12,411,377
    
    
    $
    (354,437
    )
    
    $
    143,497,914
    
    
    $
    (449,674
    )
   Fixed maturities available for saleAmortized
    
    FairCost
    
    ValueDue in one year or less
    
    $
    2,695,137
    
    
    $
    2,676,197Due after one year through five years
    
    
    18,811,838
    
    
    
    18,686,584Due after five years through ten years
    
    
    2,020,177
    
    
    
    1,888,553Due after ten years
    
    
    7,532,402
    
    
    
    7,536,88031,059,554
    
    
    
    30,788,214Mortgage backed securities
    
    
    296,372,462
    
    
    
    296,778,311Totals
    
    $
    327,432,016
    
    
    $
    327,566,525
  F-15




---



##### Table of Contents



Year ended December 31,2006
    
    2005
    
    2004Realized gains (losses) on investmentsFixed maturities
    
    $
    (384,878
    )
    
    $
    (559,952
    )
    
    $
    673,374Short-term investments
    
    
    (17,676
    )
    
    
    (245,324
    )
    
    
    4,215Net realized investment gains (losses)
    
    
    (402,554
    )
    
    
    (805,276
    )
    
    
    677,589Less: applicable income taxes
    
    
    140,894
    
    
    
    281,847
    
    
    
    (237,156
    )Net realized investment gains (losses) after taxes
    
    $
    (261,660
    )
    
    $
    (523,429
    )
    
    
    440,433
 Year ended December 31,2006
    
    2005
    
    2004Change in unrealized investment appreciation
(depreciation) of securities:Fixed maturities
    
    $
    1,010,131
    
    
    $
    (2,017,718
    )
    
    $
    266,375Net unrealized investment gains (losses)
    
    
    1,010,131
    
    
    
    (2,017,718
    )
    
    
    266,375Less: applicable income taxes
    
    
    (353,546
    )
    
    
    706,201
    
    
    
    (93,231
    )Net unrealized investment gain (losses) after taxes
    
    $
    656,585
    
    
    $
    (1,311,517
    )
    
    
    173,144
  Year ended December 31,2006
    
    2005
    
    2004Fixed maturities available for sale
    
    $
    11,793,544
    
    
    $
    7,796,371
    
    
    $
    4,375,898Trading securities
    
    
    15,785,074
    
    
    
    8,486,160
    
    
    
    13,420,243Short-term investments
    
    
    7,816,937
    
    
    
    6,161,702
    
    
    
    2,999,993Equity in earnings of limited partnerships
    
    
    16,474,691
    
    
    
    17,603,357
    
    
    
    7,704,357Total investment income
    
    
    51,870,246
    
    
    
    40,047,590
    
    
    
    28,500,491Investment expenses (see note 16)
    
    
    (3,973,022
    )
    
    
    (3,987,779
    )
    
    
    (4,821,537
    )Net investment income
    
    $
    47,897,224
    
    
    $
    36,059,811
    
    
    $
    23,678,954
  F-16




---



##### Table of Contents



Amount
    
    
    Ownership %ACP Global Opportunities Fund
    
    $
    4,114,830
    
    
    
    4.90Alpha Energy Partners Class A
    
    
    1,525,554
    
    
    
    0.59Alpha Energy Partners Class C
    
    
    2,578,319
    
    
    
    1.00Alydar QP Fund
    
    
    4,467,349
    
    
    
    1.06Amici Qualified Associates, L.P.
    
    
    3,852,919
    
    
    
    0.97Artesian Credit Arbitrage Total Return Fund
    
    
    9,847,724
    
    
    
    12.50Asuka Japanese Equity Long/Short Fund, L.L.C.
    
    
    4,751,428
    
    
    
    5.33Blue Harbour Strategic Value Partners, L.P.
    
    
    3,120,196
    
    
    
    0.78Caspian Capital Partners, L.P.(1)
    
    
    9,297,264
    
    
    
    1.42Dolphin Fund, L.P.
    
    
    6,323,866
    
    
    
    4.65Five Mile Capital SIF
    
    
    9,097,219
    
    
    
    3.15Ivory Flagship Fund L.P.
    
    
    5,141,760
    
    
    
    1.09Lubben Fund, L.P.
    
    
    5,500,919
    
    
    
    5.85Mariner Dolphin Special Opportunities Fund(1)
    
    
    5,516,704
    
    
    
    21.22Mariner Opportunities Fund (1)
    
    
    4,503,903
    
    
    
    1.72Mariner Voyager LP(1)
    
    
    6,903,502
    
    
    
    12.91Midway Market Neutral Fund LLC
    
    
    6,985,579
    
    
    
    7.28MV Partners Fund I, LP  Tranche B
    
    
    1,533,184
    
    
    
    2.02Newsmith Credit Fund, LP
    
    
    10,871,881
    
    
    
    10.71Nippon Partners, LP
    
    
    4,117,366
    
    
    
    2.71P.A.W. Partners, LP
    
    
    10,259,582
    
    
    
    4.68Renaissance Institutional Equities Fund, L.L.C.
    
    
    5,196,936
    
    
    
    0.07Riva Ridge Capital Partners, L.P.
    
    
    7,211,189
    
    
    
    7.07SLS Investors
    
    
    7,251,639
    
    
    
    2.37Tricadia (CDO) Fund, LP(1)
    
    
    28,430,038
    
    
    
    98.63Wexford Spectrum Fund I, LP
    
    
    13,923,463
    
    
    
    1.88Total limited partnership hedge funds
    
    $
    182,324,313
 
 (1)
    
    Limited partnership hedge fund directly managed by Mariner (see note 16).    Margin Account
  F-17




---



##### Table of Contents



Securities Lending
  (3) Fiduciary Funds:
   (Unaudited)2006
    
    
    2005Cash and short-term investments
    
    $
    16,468,618
    
    
    $
    5,870,875Premiums receivable
    
    
    25,758,823
    
    
    
    23,804,464Reinsurance and other receivables
    
    
    98,249,798
    
    
    
    68,394,368Total assets
    
    $
    140,477,239
    
    
    $
    98,069,707Due to insurance pool members
    
    
    59,305,829
    
    
    
    34,436,135Reinsurance payable
    
    
    44,424,500
    
    
    
    35,660,965Funds withheld from reinsurers
    
    
    33,011,209
    
    
    
    25,845,670Other liabilities
    
    
    3,735,701
    
    
    
    2,126,937Total liabilities
    
    $
    140,477,239
    
    
    $
    98,069,707
  (4) Insurance Operations:
 Reinsurance transactions
    F-18




---



##### Table of Contents



Reinsurer
    
    Amounts
    
    
    A.M. Best Rating(in millions)Lloyds Syndicates
    
    $
    59.2
    
    
    A (Excellent)Swiss Reinsurance America Corp.
    
    
    21.1
    
    
    A+ (Superior)Lloyds (Equitas)
    
    
    10.6
    
    
    NR-3 (Rating Procedure Inapplicable)Folksamerica Reinsurance Company
    
    
    9.9
    
    
    A (Excellent)GE Reinsurance Corp.
    
    
    8.5
    
    
    A (Excellent)Platinum Underwriters Reinsurance Co.
    
    
    8.3
    
    
    A (Excellent)XL Reinsurance America Inc.
    
    
    6.8
    
    
    A+ (Superior)Liberty Mutual Insurance Company
    
    
    5.8
    
    
    A (Excellent)FM Global (Arkwright)
    
    
    5.3
    
    
    A+ (Superior)Berkley Insurance Company
    
    
    4.5
    
    
    A (Excellent)General Reins. Corp.
    
    
    4.4
    
    
    A++ (Superior)Transatlantic Reins.
    
    
    4.2
    
    
    A+ (Superior)Everest Reinsurance
    
    
    3.9
    
    
    A+ (Superior)Total
    
    $
    152.5
       Gross
    
    Ceded
    
    Assumed
    
    
    
    
    
    Percentage(direct)
    
    to other
    
    from other
    
    
    
    
    
    of assumedYear ended
    
    amount
    
    companies
    
    companies
    
    Net amount
    
    to netDecember 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
    %December 31, 2004
    
    
    159,407,233
    
    
    
    46,505,810
    
    
    
    24,226,839
    
    
    
    137,128,262
    
    
    
    18
    %
 F-19




---



##### Table of Contents



Gross
    
    Ceded
    
    Assumed
    
    
    
    
    
    Percentage(direct)
    
    to other
    
    from other
    
    
    
    
    
    of assumedYear ended
    
    amount
    
    companies
    
    companies
    
    Net amount
    
    to netDecember 31, 2006
    
    $
    216,737,670
    
    
    $
    79,063,222
    
    
    $
    14,159,694
    
    
    $
    151,834,142
    
    
    
    9
    %December 31, 2005
    
    
    178,807,549
    
    
    
    65,663,023
    
    
    
    21,412,678
    
    
    
    134,557,204
    
    
    
    16
    %December 31, 2004
    
    
    142,738,099
    
    
    
    46,033,709
    
    
    
    19,628,864
    
    
    
    116,333,254
    
    
    
    17
    %
  Unpaid losses
  Year ended December 31,2006
    
    
    2005
    
    
    2004(In thousands)Net liability for losses and loss adjustment
expenses at beginning of year
    
    $
    289,217
    
    
    $
    255,479
    
    
    $
    242,311Provision for losses and loss adjustment
expenses occurring in current year
    
    
    93,803
    
    
    
    105,537
    
    
    
    81,518Increase (decrease) in estimated losses and loss
adjustment expenses for claims occurring
in prior years(1)
    
    
    (7,667
    )
    
    
    (13,247
    )
    
    
    (14,960
    )Net loss and loss adjustment expenses
incurred
    
    
    86,136
    
    
    
    92,290
    
    
    
    66,558Less:Losses and loss adjustment expense payments
for claims occurring during:Current year
    
    
    9,641
    
    
    
    15,453
    
    
    
    10,287Prior years
    
    
    72,771
    
    
    
    43,099
    
    
    
    43,10382,412
    
    
    
    58,552
    
    
    
    53,390Net liability for losses and loss adjustment
expenses at year end
    
    
    292,941
    
    
    
    289,217
    
    
    
    255,479Ceded unpaid losses and loss adjustment
expenses at year end
    
    
    286,238
    
    
    
    299,648
    
    
    
    247,782Gross unpaid losses and loss adjustment
expenses at year end
    
    $
    579,179
    
    
    $
    588,865
    
    
    $
    503,261
 
 (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 $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. Our net loss F-20




---



##### Table of Contents



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.The $15 million decrease in 2004 reflects favorable loss
development in the aviation line, mainly in reserve
adjustments of $8.3 million for the terrorist attacks of
September 11, 2001 on the Pentagon and the hijacked
airliner that crashed in Pennsylvania, and in the ocean
marine line of business due to a lower than expected
emergence of losses in the 1998-2001 accident years.   th
  F-21




---



##### Table of Contents



Salvage and subrogation
  Deferred policy acquisition costs
  (5) Property, Improvements and Equipment, Net:
  2006
    
    2005Office furniture and equipment
    
    $
    1,653,875
    
    
    $
    1,687,560Computer equipment
    
    
    986,205
    
    
    
    699,545Computer software
    
    
    6,000,273
    
    
    
    4,574,128Leasehold improvements
    
    
    3,679,444
    
    
    
    3,433,62212,319,797
    
    
    
    10,394,855Less: accumulated depreciation and amortization
    
    
    (2,369,827
    )
    
    
    (2,136,465
    )Property, improvements and equipment, net
    
    $
    9,949,970
    
    
    $
    8,258,390
  (6) Income Taxes:
  December 31, 2006
    
    December 31, 2005Deferred Tax Assets:Loss reserves
    
    $
    12,037,171
    
    
    $
    14,170,491Unearned premiums
    
    
    4,484,928
    
    
    
    4,273,119State and local tax loss carryforwards
    
    
    4,139,451
    
    
    
    3,612,526Bad debt reserve
    
    
    956,729
    
    
    
    887,427Unrealized depreciation of investments
    
    
    
    
    
    
    306,467Compensation expense  equity awards
    
    
    914,863
    
    
    
    223,081Other
    
    
    290,928
    
    
    
    431,375Deferred tax assets
    
    
    22,824,070
    
    
    
    23,904,486Less: Valuation allowance
    
    
    4,193,440
    
    
    
    4,176,558Total deferred tax assets
    
    
    18,630,630
    
    
    
    19,727,928Deferred Tax Liabilities:Deferred policy acquisition costs
    
    
    4,680,071
    
    
    
    4,197,105Unrealized appreciation of investments
    
    
    47,079
    
    
    
    Deferred investment income
    
    
    2,397,529
    
    
    
    5,197,737Accrued salvage and subrogation
    
    
    242,688
    
    
    
    291,899Other
    
    
    484,303
    
    
    
    654,505Total deferred tax liabilities
    
    
    7,851,670
    
    
    
    10,341,246Net deferred tax assets
    
    $
    10,778,960
    
    
    $
    9,386,682
 F-22




---



##### Table of Contents



December 31, 2006
    
    December 31, 2005
    
    December 31, 2004Balance, beginning of year
    
    $
    4,176,558
    
    
    $
    3,790,355
    
    
    $
    3,495,116Change in valuation allowance
    
    
    16,882
    
    
    
    386,203
    
    
    
    295,239Balance, end of period
    
    $
    4,193,440
    
    
    $
    4,176,558
    
    
    $
    3,790,355
    Year ended December 31,2006
    
    2005
    
    2004Income taxes at the Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Tax exempt interest
    
    
    (0.2
    )
    
    
    (0.5
    )
    
    
    (0.2
    )Valuation allowance
    
    
    0.0
    
    
    
    2.6
    
    
    
    1.3State taxes
    
    
    (1.0
    )
    
    
    (2.0
    )
    
    
    (0.9
    )Other, net
    
    
    (0.3
    )
    
    
    (1.1
    )
    
    
    0.1Income tax provisions
    
    
    33.5
    %
    
    
    34.0
    %
    
    
    35.3
    %
    (7) Statutory Income and Surplus:
  F-23




---



##### Table of Contents



Combined
    
    Combined
    
    DividendsStatutory
    
    Statutory
    
    DeclaredYear ended
    
    Net Income
    
    Surplus
    
    To ParentDecember 31, 2006
    
    $
    28,880,000
    
    
    $
    197,289,000
    
    
    $
    17,600,000December 31, 2005
    
    $
    5,679,000
    
    
    $
    186,848,000
    
    
    $
    8,500,000December 31, 2004
    
    $
    5,363,000
    
    
    $
    181,633,000
    
    
    $
    15,500,000
   (8) Employee Retirement Plans:
  (9) Debt:
    (10) Commitments:
   Amount2007
    
    
    1,790,0702008
    
    
    1,806,4452009
    
    
    1,803,2072010
    
    
    1,763,7222011
    
    
    1,734,606Thereafter
    
    
    8,107,480Total
    
    $
    17,005,530
 F-24




---



##### Table of Contents



(11) Comprehensive Income:
  Year ended December 31,2006
    
    2005
    
    2004Net income
    
    $
    29,850,480
    
    
    $
    9,700,879
    
    
    $
    14,630,665Other comprehensive income (loss), net of tax:Unrealized holding gains (losses) on securities,
net of deferred tax (expense) benefit of
$(212,652), 988,048 and $(330,387)
    
    
    394,925
    
    
    
    (1,834,946
    )
    
    
    613,577Less: reclassification adjustment for gains (losses)
realized in net income, net of tax benefit (expense)
of $140,894, $281,847 and $(237,156)
    
    
    (261,660
    )
    
    
    (523,429
    )
    
    
    440,433Other comprehensive income (loss)
    
    
    656,585
    
    
    
    (1,311,517
    )
    
    
    173,144Total comprehensive income
    
    $
    30,507,065
    
    
    $
    8,389,362
    
    
    $
    14,803,809
  (12) Common Stock Repurchase Plan and Shareholders Equity:
    F-25




---



##### Table of Contents



December 31, 2006
    
    December 31, 2005
    
    December 31, 2004Weighted
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    AverageNet
    
    Shares
    
    Per
    
    Net
    
    Shares
    
    Per
    
    Net
    
    Shares
    
    PerIncome
    
    Outstanding
    
    Share
    
    Income
    
    Outstanding
    
    Share
    
    Income
    
    Outstanding
    
    Share(In thousands except for per share data)Basic EPS
    
    $
    29,850
    
    
    
    8,807
    
    
    $
    3.39
    
    
    $
    9,701
    
    
    
    8,734
    
    
    $
    1.11
    
    
    $
    14,631
    
    
    
    9,736
    
    
    $
    1.50Effect of Dilutive Securities:Equity Awards
    
    
    
    
    
    
    370
    
    
    $
    (.14
    )
    
    
    
    
    
    
    184
    
    
    $
    (.02
    )
    
    
    
    
    
    
    180
    
    
    $
    (.02
    )Diluted EPS
    
    $
    29,850
    
    
    
    9,177
    
    
    $
    3.25
    
    
    $
    9,701
    
    
    
    8,918
    
    
    $
    1.09
    
    
    $
    14,631
    
    
    
    9,916
    
    
    $
    1.48
 (13) Stock Plans:
    December 31, 2006
    
    December 31, 2005
    
    December 31, 2004Number
    
    Weighted
    
    Number
    
    Weighted
    
    Number
    
    Weightedof
    
    Average Price
    
    of
    
    Average Price
    
    of
    
    Average PriceShares Under Option
    
    Shares
    
    Per Share
    
    Shares
    
    Per Share
    
    Shares
    
    Per ShareOutstanding,
beginning of year
    
    
    407,850
    
    
    $
    15.12
    
    
    
    468,500
    
    
    $
    15.19
    
    
    
    520,700
    
    
    $
    14.98Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    $
    26.00Exercised
    
    
    (72,025
    )
    
    $
    14.46
    
    
    
    (59,050
    )
    
    $
    15.02
    
    
    
    (42,250
    )
    
    $
    14.96Forfeited
    
    
    (2,625
    )
    
    $
    14.47
    
    
    
    (1,600
    )
    
    $
    14.47
    
    
    
    (19,950
    )
    
    $
    14.77Outstanding,
end of year
    
    
    333,200
    
    
    $
    15.43
    
    
    
    407,850
    
    
    $
    15.26
    
    
    
    468,500
    
    
    $
    15.22Exercisable,
end of year
    
    
    323,200
    
    
    $
    15.22
    
    
    
    285,100
    
    
    $
    15.12
    
    
    
    226,175
    
    
    $
    15.19
 F-26




---



##### Table of Contents



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




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F-28




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##### Table of Contents



(14) Segment Information:
     Year ended December 31,2006
    
    2005
    
    2004(in thousands)Income
    
    
    
    
    
    Income
    
    
    
    
    
    IncomeSegments
    
    Revenues
    
    (Loss)
    
    Revenues
    
    (Loss)
    
    Revenues
    
    (Loss)Ocean marine
    
    $
    78,898
    
    
    $
    31,691
    
    
    $
    72,326
    
    
    $
    8,491
    
    
    $
    76,779
    
    
    $
    11,912Inland marine/Fire
    
    
    7,792
    
    
    
    (53
    )
    
    
    7,295
    
    
    
    1,454
    
    
    
    4,891
    
    
    
    1,901Other liability
    
    
    65,402
    
    
    
    3,721
    
    
    
    55,277
    
    
    
    815
    
    
    
    35,056
    
    
    
    (916
    )Aircraft
    
    
    284
    
    
    
    (455
    )
    
    
    857
    
    
    
    2,214
    
    
    
    68
    
    
    
    12,173Subtotal
    
    
    152,376
    
    
    
    34,904
    
    
    
    135,755
    
    
    
    12,974
    
    
    
    116,794
    
    
    
    25,070Other income
    
    
    596
    
    
    
    596
    
    
    
    334
    
    
    
    334
    
    
    
    1,790
    
    
    
    1,790Net investment income
    
    
    47,897
    
    
    
    47,897
    
    
    
    36,060
    
    
    
    36,060
    
    
    
    23,679
    
    
    
    23,679Net realized investment gains (losses)
    
    
    (403
    )
    
    
    (403
    )
    
    
    (805
    )
    
    
    (805
    )
    
    
    678
    
    
    
    678General and administrative expenses
    
    
    
    
    
    
    (31,401
    )
    
    
    
    
    
    
    (27,183
    )
    
    
    
    
    
    
    (23,247
    )Interest expense
    
    
    
    
    
    
    (6,712
    )
    
    
    
    
    
    
    (6,679
    )
    
    
    
    
    
    
    (5,353
    )Income tax expense
    
    
    
    
    
    
    (15,031
    )
    
    
    
    
    
    
    (5,000
    )
    
    
    
    
    
    
    (7,986
    )Total
    
    $
    200,466
    
    
    $
    29,850
    
    
    $
    171,344
    
    
    $
    9,701
    
    
    $
    142,941
    
    
    $
    14,631
 F-29




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##### Table of Contents



2006
    
    2005
    
    2004(in thousands)United States
    
    $
    226,352
    
    
    $
    185,161
    
    
    $
    165,388Europe
    
    
    9,084
    
    
    
    9,853
    
    
    
    12,489Asia
    
    
    2,647
    
    
    
    2,931
    
    
    
    2,430Latin America
    
    
    479
    
    
    
    879
    
    
    
    991Other
    
    
    2,747
    
    
    
    1,546
    
    
    
    2,336Total Gross Written Premiums
    
    $
    241,309
    
    
    $
    200,370
    
    
    $
    183,634
 (15) Quarterly Financial Data (unaudited):
  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
 Three Months EndedMarch 31,
    
    June 30,
    
    Sept. 30,
    
    Dec. 31,2005
    
    2005
    
    2005
    
    2005(in thousands, except per share data)Total revenues
    
    $
    42,142
    
    
    $
    44,018
    
    
    $
    35,780
    
    
    $
    49,405Income(loss) before income taxes
    
    $
    5,118
    
    
    $
    7,616
    
    
    $
    (8,041
    )
    
    $
    10,007Net income(loss)
    
    $
    3,317
    
    
    $
    4,958
    
    
    $
    (5,230
    )
    
    $
    6,655Basic earnings (loss) per share
    
    $
    .38
    
    
    $
    .57
    
    
    $
    (.60
    )
    
    $
    .76Diluted earnings (loss) per share
    
    $
    .37
    
    
    $
    .56
    
    
    $
    (.60
    )
    
    $
    .74
 (16) Related Party Transactions:
   F-30




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##### Table of Contents



(17) Legal Proceedings:
   F-31




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##### Table of Contents



FINANCIAL STATEMENT SCHEDULES
 
 SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
 NYMAGIC, INC.
 Balance Sheets
  December 31,
    
    
    December 31,2006
    
    
    2005Assets:Cash
    
    $
    878,947
    
    
    $
    564,460Investments
    
    
    105,425,534
    
    
    
    58,082,945Total cash and investments
    
    
    106,304,481
    
    
    
    58,647,405Investment in subsidiaries
    
    
    238,810,495
    
    
    
    226,407,073Due from subsidiaries
    
    
    20,983,782
    
    
    
    15,754,128Receivable for securities sold
    
    
    
    
    
    
    34,735,775Other assets
    
    
    7,057,719
    
    
    
    6,068,785Total assets
    
    $
    373,156,477
    
    
    $
    341,613,166Liabilities:Notes payable
    
    $
    100,000,000
    
    
    $
    100,000,000Dividend payable
    
    
    788,980
    
    
    
    536,520Other liabilities
    
    
    1,667,951
    
    
    
    1,792,520Total liabilities
    
    
    102,456,931
    
    
    
    102,329,040Shareholders equity:Common stock
    
    
    15,505,815
    
    
    
    15,415,790Paid-in capital
    
    
    42,219,900
    
    
    
    38,683,462Accumulated other comprehensive income (loss)
    
    
    87,432
    
    
    
    (569,153
    )Retained earnings
    
    
    286,147,400
    
    
    
    259,015,028Treasury stock
    
    
    (73,261,001
    )
    
    
    (73,261,001
    )Total shareholders equity
    
    
    270,699,546
    
    
    
    239,284,126Total liabilities and shareholders equity
    
    $
    373,156,477
    
    
    $
    341,613,166
 Statements of Income
 Year ended December 31,2006
    
    
    2005
    
    
    2004Revenues:Cash
dividends from subsidiaries
    
    $
    18,500,000
    
    
    $
    8,500,000
    
    
    $
    15,500,000Net investment and other income
    
    
    7,763,602
    
    
    
    8,382,318
    
    
    
    1,785,22626,263,602
    
    
    
    16,882,318
    
    
    
    17,285,226Expenses:General and administrative expenses
    
    
    3,686,841
    
    
    
    3,090,189
    
    
    
    2,405,211Interest expenses
    
    
    6,688,932
    
    
    
    6,677,409
    
    
    
    5,351,525Income tax benefit
    
    
    (608,232
    )
    
    
    (494,921
    )
    
    
    (2,935,225
    )9,767,541
    
    
    
    9,272,677
    
    
    
    4,821,511Income before equity income
    
    
    16,496,061
    
    
    
    7,609,641
    
    
    
    12,463,715Equity in undistributed earning of subsidiaries
    
    
    13,354,419
    
    
    
    2,091,238
    
    
    
    2,166,950Net income
    
    $
    29,850,480
    
    
    $
    9,700,879
    
    
    $
    14,630,665
 F-32




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##### Table of Contents



SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NYMAGIC, INC.
Statements of Cash Flows
 Year ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    29,850,480
    
    
    $
    9,700,879
    
    
    $
    14,630,665Adjustments to net income
to cash provided by operating activities:Equity in undistributed earnings of subsidiaries
    
    
    (13,354,419
    )
    
    
    (2,091,238
    )
    
    
    (2,166,950
    )Equity in earnings of limited partnerships
    
    
    (4,986,865
    )
    
    
    (274,038
    )
    
    
    (5,113,176
    )Increase in other assets
    
    
    (988,934
    )
    
    
    (195,005
    )
    
    
    (214,300
    )Decrease (increase) in due from subsidiaries
    
    
    (5,229,654
    )
    
    
    (660,571
    )
    
    
    (3,193,389
    )(Decrease) increase in other liabilities
    
    
    (124,569
    )
    
    
    (1,413,528
    )
    
    
    (341,229
    )Net cash provided by operating activities
    
    
    5,166,039
    
    
    
    5,066,499
    
    
    
    3,601,621Cash flows from investing activities:Net sale (purchase) of other investments
    
    
    (2,326,169
    )
    
    
    8,764,071
    
    
    
    (35,695,316
    )Limited partnerships (acquired) sold
    
    
    (40,029,555
    )
    
    
    47,403,579
    
    
    
    (62,817,059
    )Receivable for securities
    
    
    34,735,775
    
    
    
    (32,107,756
    )
    
    
    (2,628,019
    )Investment
in subsidiary
    
    
    1,607,582
    
    
    
    
    
    
    
    Net cash
(used in) provided by investing activities
    
    
    (6,012,367
    )
    
    
    24,059,894
    
    
    
    (101,140,394
    )Cash flows in financing activities:Proceeds from stock issuance and other
    
    
    3,626,463
    
    
    
    1,981,601
    
    
    
    1,361,695Cash dividends paid to stockholders
    
    
    (2,465,648
    )
    
    
    (2,154,947
    )
    
    
    (2,335,451
    )Net sale of treasury shares
    
    
    
    
    
    
    (27,099,828
    )
    
    
    Proceeds from borrowings
    
    
    
    
    
    
    
    
    
    
    97,705,428Investment in subsidiary
    
    
    
    
    
    
    (1,600,000
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    1,160,815
    
    
    
    (28,873,174
    )
    
    
    96,731,672Net increase (decrease) in cash
    
    
    314,487
    
    
    
    253,219
    
    
    
    (807,101
    )Cash at beginning of period
    
    
    564,460
    
    
    
    311,241
    
    
    
    1,118,342Cash at end of period
    
    $
    878,947
    
    
    $
    564,460
    
    
    $
    311,241
  F-33




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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 FDEFERRED
    
    FUTURE POLICYPOLICY
    
    BENEFITS, LOSSES
    
    
    
    
    
    OTHER POLICYACQUISITION
    
    CLAIMS AND
    
    UNEARNED
    
    CLAIMS AND BENEFITS
    
    PREMIUMCOST
    
    LOSS EXPENSES
    
    PREMIUMS
    
    PAYABLE
    
    REVENUESEGMENTS
    
    (caption 7)
    
    (caption 13-a-1)
    
    (caption 13-a-2)
    
    (caption 13-a-3)
    
    (caption 1)2006
    
    
    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
    
    
    
    
    
    
    $
    134,5572004
    
    
    Ocean marine
    
    $
    7,534
    
    
    $
    198,655
    
    
    $
    39,628
    
    
    
    
    
    
    $
    76,361Inland marine/Fire
    
    
    358
    
    
    
    21,801
    
    
    
    8,170
    
    
    
    
    
    
    
    4,919Other liability
    
    
    5,163
    
    
    
    126,023
    
    
    
    35,290
    
    
    
    
    
    
    
    35,056Aircraft
    
    
    
    
    
    
    156,782
    
    
    
    
    
    
    
    
    
    
    
    (3
    )Total
    
    $
    13,055
    
    
    $
    503,261
    
    
    $
    83,088
    
    
    
    
    
    
    $
    116,333
 Column A
    
    Column G
    
    Column H
    
    Column I
    
    Column J
    
    Column KBENEFITS,NET
    
    CLAIMS, LOSSES
    
    AMORTIZATION OFINVESTMENT
    
    AND SETTLEMENT
    
    DEFFERED
    
    OTHERINCOME
    
    EXPENSES
    
    POLICY
    
    OPERATING
    
    PREMIUMSSEGMENTS
    
    (caption 2)
    
    (caption 4)
    
    ACQUISITION COSTS
    
    EXPENSES
    
    WRITTEN2006
    
    
    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
    
    
    $
    133,8922004
    
    
    Ocean marine
    
    
    
    
    
    $
    47,544
    
    
    $
    17,323
    
    
    
    
    
    
    $
    82,689Inland marine/Fire
    
    
    
    
    
    
    2,360
    
    
    
    630
    
    
    
    
    
    
    
    5,255Other liability
    
    
    
    
    
    
    28,829
    
    
    
    7,143
    
    
    
    
    
    
    
    49,190Aircraft
    
    
    
    
    
    
    (12,175
    )
    
    
    70
    
    
    
    
    
    
    
    (6
    )Total
    
    $
    23,679
    
    
    $
    66,558
    
    
    $
    25,166
    
    
    $
    23,247
    
    
    $
    137,128
 F-34




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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, 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
    )
    
    $
    17,016,018December 31, 2004
Allowance for
doubtful accounts
    
    $
    13,273,522
    
    
    $
    1,379,926
    
    
    $
    (1,815,441
    )
    
    $
    12,838,007
  F-35




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##### Table of Contents



NYMAGIC, INC.
 
 SCHEDULE VI  SUPPLEMENTARY INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS
 (In thousands)DEFERRED
    
    RESERVE FORAFFILIATION
    
    POLICY
    
    UNPAID CLAIMS
    
    
    
    
    
    UNEARNED
    
    NET
    
    NETWITH
    
    ACQUISITION
    
    AND CLAIMS
    
    
    
    
    
    PREMIUM
    
    EARNED
    
    INVESTMENTREGISTRANT
    
    COSTS
    
    EXPENSES
    
    DISCOUNT
    
    RESERVE
    
    PREMIUMS
    
    INCOMEDECEMBER 31, 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
    
    
    $
    27,893DECEMBER 31, 2004
CONSOLIDATED SUBSIDIARIES
    
    
    13,055
    
    
    
    503,261
    
    
    
    
    
    
    
    83,088
    
    
    
    116,333
    
    
    
    21,894
 CLAIMS AND CLAIMSEXPENSES INCURRED
    
    AMORTIZATIONRELATED TO
    
    OF DEFERREDAFFILIATION
    
    
    
    
    
    
    
    
    
    POLICY
    
    PAID CLAIMSWITH
    
    CURRENT
    
    PRIOR
    
    ACQUSITION
    
    AND CLAIMS
    
    PREMIUMSREGISTRANT
    
    YEAR
    
    YEARS
    
    COSTS
    
    EXPENSES
    
    WRITTENDECEMBER 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
    
    
    $
    133,892DECEMBER 31, 2004
CONSOLIDATED SUBSIDIARIES
    
    
    81,518
    
    
    
    (14,960
    )
    
    
    25,166
    
    
    
    53,390
    
    
    
    137,128
 F-36