UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

The Navigators Group, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

THE NAVIGATORS GROUP, INC.

400 Atlantic Street, 8^th Floor

Stamford, Connecticut 06901

October 12, 2018

Dear Stockholder:

You are cordially invited to attend a special meeting of stockholders of The Navigators Group, Inc., a Delaware corporation (the “Company”), to be held on November 16, 2018, at 10:00 a.m. Eastern Time at the Company’s office at 400 Atlantic Street, Stamford, Connecticut 06901 (including any adjournments or postponements thereof, the “special meeting”). The purpose of the special meeting is to consider and vote on proposals relating to the proposed acquisition of the Company by The Hartford Financial Services Group, Inc., a Delaware corporation (“Parent”), for $70.00 per share in cash. Parent is a leader in property and casualty insurance, group benefits and mutual funds headquartered in Hartford, Connecticut. Regardless of whether you plan to attend the special meeting, we encourage you to vote your shares by mail, by telephone or through the Internet following the procedures outlined below.

On August 22, 2018, the Company entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “merger agreement”) with Parent and Renato Acquisition Co., a Delaware corporation and a direct wholly owned subsidiary of Parent (“Merger Sub”), providing for, subject to the satisfaction or waiver of specified conditions, the acquisition of the Company by Parent at a price of $70.00 per share in cash. Subject to the terms and conditions of the merger agreement, Merger Sub will be merged with and into the Company (the “merger”), with the Company surviving the merger as a wholly owned subsidiary of Parent. At the special meeting, the Company will ask you to adopt the merger agreement.

At the effective time of the merger, each share of the Company’s common stock that is issued and outstanding immediately prior to the effective time (other than (i) shares owned by the Company, Parent, Merger Sub or any of their respective wholly owned subsidiaries and (ii) shares held by stockholders who have not voted in favor of the merger and who properly and validly perfect their statutory rights of appraisal in respect of such shares in accordance with Section 262 of the Delaware General Corporation Law) will be cancelled and automatically converted into the right to receive $70.00 per share in cash, without interest, subject to any applicable withholding taxes.

The proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the merger agreement, the merger and the other transactions contemplated by the merger agreement. We encourage you to carefully read the accompanying proxy statement and the copy of the merger agreement attached as Annex A to the accompanying proxy statement.

The board of directors of the Company (the “Board”) carefully reviewed and considered the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. By a unanimous vote, the Board (i) approved and declared advisable the merger agreement and the merger and the consummation by the Company of the transactions contemplated by the merger agreement, including the merger,

(ii) authorized and approved the execution, delivery and performance of the merger agreement and the consummation by the Company of the transactions contemplated by the merger agreement, including the merger, (iii) determined that the transactions contemplated by the merger agreement, including the merger, are fair to and in the best interests of the Company and its stockholders, (iv) determined that the treatment of outstanding equity awards under the Company’s Second Amended and Restated 2005 Stock Incentive Plan as set forth in the merger agreement is desirable and appropriate for the Company, (v) directed that a proposal to adopt the merger agreement be submitted to a vote at a meeting of the Company’s stockholders and (vi) recommended that the Company’s stockholders vote for the adoption of the merger agreement. Accordingly, the Board unanimously recommends you vote “FOR” the proposal to adopt the merger agreement.

Your vote is important. Whether or not you plan to attend the special meeting and regardless of the number of shares you own, your careful consideration of, and vote on, the proposal to adopt the merger agreement is important, and we encourage you to vote promptly. The merger cannot be completed unless the merger agreement is adopted by stockholders holding a majority of the outstanding shares of the Company’s common stock entitled to vote on such matter. The failure to vote will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

After reading the accompanying proxy statement, please make sure to vote your shares promptly by completing, signing and dating the accompanying proxy card and returning it in the enclosed prepaid envelope or by voting by telephone or through the Internet by following the instructions on the accompanying proxy card. If you hold shares through an account with a bank, broker, trust or other nominee, please follow the instructions you receive from it to vote your shares.

Thank you in advance for your continued support and your consideration of this matter.

Neither the United States Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the merger or the other transactions contemplated by the merger agreement, passed upon the merits or fairness of the merger or the other transactions contemplated by the merger agreement or passed upon the adequacy or accuracy of the disclosure in this letter or the accompanying proxy statement. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated October 12, 2018 and is first being mailed to the Company’s stockholders on or about October 12, 2018.

THE NAVIGATORS GROUP, INC.

400 Atlantic Street, 8^th Floor

Stamford, Connecticut 06901

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held on November 16, 2018

To the Stockholders of The Navigators Group, Inc.:

A special meeting of stockholders of The Navigators Group, Inc., a Delaware corporation (the “Company”), will be held on November 16, 2018, at 10:00 a.m. Eastern Time at the Company’s office at 400 Atlantic Street, Stamford, Connecticut 06901 (including any postponements or adjournments thereof, the “special meeting”), for the following purposes:

Stockholders of record at the close of business on October 10, 2018 (the “record date”) are entitled to notice of, and to vote at, the special meeting.

For more information concerning the special meeting, the merger agreement, the merger and the other transactions contemplated by the merger agreement, please review the accompanying proxy statement and the copy of the merger agreement attached as Annex A to the accompanying proxy statement.

The board of directors of the Company (the “Board”) carefully reviewed and considered the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. By a unanimous vote, the Board (i) approved and declared advisable the merger agreement and the merger and the consummation by the Company of the transactions contemplated by the merger agreement, including the merger, (ii) authorized and approved the execution, delivery and performance of the merger agreement and the consummation by the Company of the transactions contemplated by the merger agreement, including the merger, (iii) determined that the transactions contemplated by the merger agreement, including the merger, are fair to and

in the best interests of the Company and its stockholders, (iv) determined that the treatment of outstanding equity awards under the Company’s Second Amended and Restated 2005 Stock Incentive Plan as set forth in the merger agreement is desirable and appropriate for the Company, (v) directed that a proposal to adopt the merger agreement be submitted to a vote at a meeting of the Company’s stockholders and (vi) recommended that the Company’s stockholders vote for the adoption of the merger agreement.

The Board unanimously recommends that at the special meeting you vote “FOR” the proposal to adopt the merger agreement, “FOR” the approval, by a non-binding advisory vote, of the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the merger and “FOR” the proposal to adjourn the special meeting if necessary or appropriate, including to solicit additional proxies.

To assure that your shares are represented at the special meeting, regardless of whether you plan to attend the special meeting in person, please fill in your vote, sign and mail the enclosed proxy card as soon as possible. We have enclosed a return envelope, which requires no postage if mailed in the United States. Alternatively, you may vote by telephone or through the Internet. Instructions regarding each of the methods of voting are provided on the enclosed proxy card. If you are voting by telephone or through the Internet, then your voting instructions must be received by 11:59 p.m. Eastern Time on the day before the special meeting. Your proxy is being solicited by the Board and the other participants named in the accompanying proxy statement.

If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please call our proxy solicitor, Morrow Sodali LLC, toll-free at (800) 662-5200.

If you fail to return your proxy, vote by telephone or through the Internet or attend the special meeting in person, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

By Order of the Board of Directors

Emily B. Miner

Secretary

Stamford, Connecticut

October 12, 2018

Please Vote Today—Your Vote is Important

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to briefly address some commonly asked questions regarding the special meeting and the merger. These questions and answers do not address all questions that may be important to you as a Company stockholder. Please refer to the more detailed information contained elsewhere in this proxy statement, the Annexes to this proxy statement and the documents referred to in this proxy statement.

The receipt of cash in exchange for shares of Company common stock pursuant to the merger generally will be a taxable transaction for U.S. federal income tax purposes. See the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger,” beginning on page 76, for a more detailed description of the U.S. federal income tax consequences of the merger. You should consult your own tax advisor for a full understanding of how the merger will affect your U.S. federal, state, local and foreign taxes.

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At the special meeting, you will be asked to consider and vote on:

The approval of the non-binding compensation advisory proposal requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. Although the Board intends to consider the vote resulting from this proposal, the vote is advisory only and, therefore, is not binding on the Company or Parent or any of their respective subsidiaries, and, if the merger agreement is adopted by the Company stockholders and the merger is completed, the compensation that is based on or otherwise relates to the merger will be payable to our named executive officers even if this proposal is not approved. An abstention from voting will have the same effect as a vote “AGAINST” the proposal.

The approval of the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. In addition, even if a quorum is not present at the special meeting, the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter may adjourn the meeting to another place, date or time. In each case, an abstention from voting will have the same effect as a vote “AGAINST” the proposal.

Even if the proposal to adjourn the special meeting is not approved by the Company stockholders, the special meeting may be adjourned to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement, by the chairman of the meeting, after consultation with Parent and as otherwise permitted under the merger agreement.

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For a discussion of the factors that the Board considered in determining to recommend the adoption of the merger agreement, see the section entitled “The Merger—Reasons for Recommending the Adoption of the Merger Agreement,” beginning on page 43. In addition, in considering the recommendation of the Board with respect to the merger agreement, you should be aware that some of our directors and executive officers have interests that may be different from, or in addition to, the interests of the Company stockholders generally. For additional information, see the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger,” beginning on page 64.

All shares of Company common stock held by the Company stockholders that are present in person, or represented by proxy, and entitled to vote at the special meeting, regardless of how such shares are voted or whether such stockholders have indicated on their proxy that they are abstaining from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned.

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If you are submitting your proxy by telephone or through the Internet, your voting instructions must be received by 11:59 p.m. Eastern Time on the day before the special meeting.

Submitting your proxy by mail, by telephone or through the Internet will not prevent you from voting in person at the special meeting. You are encouraged to submit a proxy by mail, by telephone or through the Internet even if you plan to attend the special meeting in person to ensure that your shares of Company common stock are represented at the special meeting.

If you return your signed and dated proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted “FOR” the proposal to adopt the merger agreement, “FOR” the approval of the non-binding compensation advisory proposal and “FOR” the approval of the proposal to adjourn the special meeting if necessary or appropriate.

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If you have instructed a bank, broker, trust or other nominee to vote your shares, you must follow the instructions received from your bank, broker, trust or other nominee to change your vote.

All properly submitted proxies received by us before the special meeting that are not revoked or changed prior to being exercised at the special meeting will be voted at the special meeting in accordance with the instructions indicated on the proxies or, if no instructions were provided, “FOR” each of the proposals.

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Morrow Sodali LLC

470 West Ave

Stamford, CT 06902

Toll-Free: (800) 662-5200

Email: navg@morrowsodali.com

If your shares are held for you by a bank, broker, trust or other nominee, you should also call your bank, broker, trust or other nominee for additional information.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain information in this proxy statement constitutes “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or “projects.” However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. These statements may relate to risks or uncertainties associated with:

The Company can give no assurance that the expectations expressed or implied in the forward-looking statements contained herein will be attained. The forward-looking statements are made as of the date of this proxy statement, and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

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PARTIES TO THE MERGER

The Company

The Navigators Group, Inc., a Delaware corporation, is a global specialty insurance holding company. We provide customized insurance solutions designed to protect clients from the complex risks they face. For more than 40 years, the Company has added value for broker partners and their clients—both in underwriting and in claims—through the depth and quality of our technical and industry expertise. Industries we serve include maritime, construction, energy, environmental, professional services and life sciences. Headquartered in Stamford, Connecticut, the Company has offices in the United States, the United Kingdom, Continental Europe and Asia. Shares of Company common stock are listed on NASDAQ and trade under the symbol “NAVG.”    

The Company’s principal executive offices are located at 400 Atlantic Street, 8th Floor, Stamford, Connecticut 06901, and its telephone number is (203) 905-6090. Our website address is www.navg.com. The information provided on our website is not part of this proxy statement and is not incorporated by reference in this proxy statement by this or any other reference to our website in this proxy statement.

Additional information about the Company is contained in our public filings, which are incorporated by reference in this proxy statement. For additional information, see the section entitled “Where You Can Find More Information,” beginning on page 119.

Parent

The Hartford Financial Services Group, Inc., a Delaware corporation, is a leader in property and casualty insurance, group benefits and mutual funds. With more than 200 years of expertise, Parent is widely recognized for its service excellence, sustainability practices, trust and integrity.

Parent’s principal executive offices are located at One Hartford Plaza, Hartford, Connecticut 06155, and its telephone number is (860) 547-5000. Its website address is www.thehartford.com. The information provided on such website is not part of this proxy statement and is not incorporated by reference in this proxy statement by this or any other reference to such website in this proxy statement.

Merger Sub

Renato Acquisition Co., a Delaware corporation, is a direct wholly owned subsidiary of Parent incorporated on August 17, 2018, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not carried on any activities on or prior to the date of this proxy statement, except for activities incidental to its formation and activities undertaken in connection with the negotiation and execution of the merger agreement and the transactions contemplated by the merger agreement. Upon completion of the merger, Merger Sub will merge with and into the Company, and Merger Sub will cease to exist. Merger Sub’s principal executive offices are located at One Hartford Plaza, Hartford, Connecticut 06155, and its telephone number is (860) 547-5000.

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THE SPECIAL MEETING

We are furnishing this proxy statement as part of the solicitation of proxies by the Board for use at the special meeting and at any properly convened meeting following an adjournment or postponement of the special meeting.

Date, Time and Place of the Special Meeting

The special meeting will be held on November 16, 2018, at 10:00 a.m. Eastern Time at the Company’s office at 400 Atlantic Street, Stamford, Connecticut 06901.

Company stockholders who wish to attend the special meeting may be asked to present valid photo identification. Please note that if you hold your shares of Company common stock in “street name,” you will need to bring a copy of your voting instruction card or brokerage statement reflecting your stock ownership as of the record date and check in at the registration desk at the meeting. Cameras, sound or video recording devices or any similar equipment, or the distribution of any printed materials, will not be permitted at the meeting without the approval of the Company.

Purpose of the Special Meeting

At the special meeting, the Company stockholders of record will be asked to consider and vote on:

Recommendation of the Board

The Board carefully reviewed and considered the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. By a unanimous vote, the Board (i) adopted and declared advisable the merger agreement and the merger and the consummation by the Company of the transactions contemplated by the merger agreement, including the merger, (ii) authorized and approved the execution, delivery and performance of the merger agreement and the consummation by the Company of the transactions contemplated by the merger agreement, including the merger, (iii) determined that the transactions contemplated by the merger agreement, including the merger, are fair to and in the best interests of the Company and its stockholders, (iv) determined that the treatment of outstanding equity awards under the Company stock plan (as defined below) as set forth in the merger agreement is desirable and appropriate for the Company, (v) directed that a proposal to adopt the merger agreement be submitted to a vote at a meeting of the Company stockholders and (vi) recommended that the Company stockholders vote for the adoption of the merger agreement. Accordingly, the Board unanimously recommends you vote “FOR” the proposal to adopt the merger agreement.

The Board also unanimously recommends you vote “FOR” the non-binding compensation advisory proposal and “FOR” the approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

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Record Date and Quorum

Each holder of record of shares of Company common stock as of the close of business on October 10, 2018, which is the record date for the special meeting, is entitled to receive notice of, and to vote at, the special meeting. You will be entitled to one vote for each share of Company common stock that you owned on the record date. As of the record date, there were 29,777,883 shares of Company common stock issued and outstanding and entitled to vote at the special meeting. The presence at the special meeting, in person or by proxy, of the holders of 14,888,942 shares of Company common stock (a majority of the outstanding capital stock of the Company entitled to vote) constitutes a quorum for the special meeting.

If you are a Company stockholder of record and you vote by mail, by telephone or through the Internet or in person at the special meeting, then your shares of Company common stock will be counted as part of the quorum. If you are a “street name” holder of shares of Company common stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.

All shares of Company common stock held by stockholders of record that are present in person or represented by proxy and entitled to vote at the special meeting, regardless of how such shares are voted or whether such stockholders abstain from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned.

Vote Required for Approval

Merger Agreement Proposal. The proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Company common stock entitled to vote on such matter.

Non-Binding Compensation Advisory Proposal. The approval of the non-binding compensation advisory proposal requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. The vote is advisory only and, therefore, is not binding on the Company or Parent or any of their respective subsidiaries, and, if the merger agreement is adopted by the Company stockholders and the merger is completed, the compensation that is based on or otherwise relates to the merger will be payable to our named executive officers even if this proposal is not approved.

Adjournment Proposal. The approval of the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. In addition, even if a quorum is not present at the special meeting, the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter may adjourn the meeting to another place, date or time. Even if the proposal to adjourn the special meeting is not approved by the Company stockholders, the special meeting may be adjourned to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement, by the chairman of the meeting, after consultation with Parent and as otherwise permitted under the merger agreement.

Effect of Abstentions and Broker Non-Votes

The proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Company common stock entitled to vote on such matter. Therefore, the failure to vote or the abstention from voting will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

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The approval of the non-binding compensation advisory proposal requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. Consequently, the abstention from voting will have the same effect as a vote “AGAINST” the proposal.

The proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. Consequently, the abstention from voting will have the same effect as a vote “AGAINST” the proposal. In addition, even if a quorum is not present at the special meeting, the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter may adjourn the meeting to another place, date or time. In each case, the abstention from voting will have the same effect as a vote “AGAINST” the proposal.

Under applicable stock exchange rules, all of the proposals in this proxy statement are non-routine matters, so there can be no broker non-votes at the special meeting. A broker non-vote occurs when shares held by a bank, broker, trust or other nominee are represented at a meeting, but the bank, broker, trust or other nominee has not received voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares on a particular proposal but has discretionary voting power on other proposals at such meeting. Accordingly, if your shares are held in “street name,” your bank, broker, trust or other nominee will NOT be able to vote your shares of Company common stock on any of the proposals, and your shares will not be counted in determining the presence of a quorum unless you have properly instructed your bank, broker, trust or other nominee on how to vote. Because the proposal to adopt the merger agreement requires the affirmative vote of a majority of the outstanding shares of Company common stock, the failure to provide your bank, broker, trust or other nominee with voting instructions will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement. Because the approval of each of (i) the non-binding compensation advisory proposal and (ii) the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter, and because your bank, broker, trust or other nominee does not have discretionary authority to vote on either proposal, the failure to provide your bank, broker, trust or other nominee with voting instructions will have no effect on approval of that proposal.

How to Vote

Stockholders have a choice of voting by proxy by completing a proxy card and mailing it in the prepaid envelope provided, by calling a toll-free telephone number or through the Internet. Please refer to your proxy card or the information forwarded by your bank, broker, trust or other nominee to see which options are available to you. The telephone and Internet voting facilities for stockholders of record will close at 11:59 p.m. Eastern Time on the day before the special meeting.

If you submit your proxy by mail, by telephone or through the Internet voting procedures, but do not include “FOR,” “AGAINST” or “ABSTAIN” on a proposal to be voted, your shares of Company common stock will be voted in favor of that proposal. If you indicate “ABSTAIN” on a proposal to be voted, it will have the same effect as a vote “AGAINST” that proposal. If you wish to vote by proxy and your shares are held by a bank, broker, trust or other nominee, you must follow the voting instructions provided to you by your bank, broker, trust or other nominee. Unless you give your bank, broker, trust or other nominee instructions on how to vote your shares of Company common stock, your bank, broker, trust or other nominee will not be able to vote your shares on any of the proposals.

If you wish to vote in person at the special meeting and your shares are held in the name of a bank, broker or other holder of record, you must obtain a legal proxy, executed in your favor, from the bank, broker or other holder of record authorizing you to vote at the special meeting.

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If you do not submit a proxy or otherwise vote your shares of Company common stock in any of the ways described above, it will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement, but will have no effect on approval of the non-binding compensation advisory proposal or the approval of the proposal to adjourn the special meeting if necessary or appropriate.

If you have any questions about how to vote or direct a vote in respect of your shares of Company common stock, please call our proxy solicitor, Morrow Sodali LLC, toll-free at (800) 662-5200.

YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATE(S) WITH YOUR PROXY CARD. A letter of transmittal with instructions for the surrender of certificates representing shares of Company common stock will be mailed to stockholders if the merger is completed.

Revocation of Proxies

Any proxy given by a Company stockholder may be revoked at any time before it is voted at the special meeting by doing any of the following:

“Street name” holders of shares of Company common stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies.

Adjournments and Postponements

Although it is not currently expected, the special meeting may be adjourned or postponed one or more times to a later day or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement. Your shares will be voted on any adjournment proposal in accordance with the instructions indicated in your proxy or, if no instructions were provided, “FOR” the proposal.

Regardless of whether a quorum is present at the special meeting, the special meeting may be adjourned, after consultation with Parent and as otherwise permitted under the merger agreement, by the chairman of the meeting or by the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. The adjourned meeting may take place without further notice other than by an announcement made at the special meeting unless the adjournment is for more than 30 days or, if, after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the special meeting. If a quorum is not present at the special meeting, or if a quorum is present at the special meeting but there are insufficient votes at the time of the special meeting to adopt the merger agreement, then the Company may seek to adjourn the special meeting after consultation with Parent and as otherwise permitted under the merger agreement. In addition, the Board may, after consultation with Parent, postpone the special meeting upon public announcement made prior to the date previously scheduled for the special meeting for the purpose of soliciting additional proxies or as otherwise permitted under the merger agreement.

Solicitation of Proxies

The Company is soliciting the enclosed proxy card on behalf of the Board, and the Company will bear the expenses in connection with the solicitation of proxies. In addition to solicitation by mail, the Company and its

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directors, officers and employees may solicit proxies in person, by telephone or by electronic means. These persons will not be specifically compensated for doing this.

The Company has retained Morrow Sodali LLC to assist in the solicitation process. The Company will pay Morrow Sodali LLC a fee of approximately $8,500 plus reimbursement of certain specified out-of-pocket expenses. The Company also has agreed to indemnify Morrow Sodali LLC against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).

The Company will ask banks, brokers, trusts and other nominees to forward the Company’s proxy solicitation materials to the beneficial owners of shares of Company common stock held of record by such banks, brokers, trusts or other nominees. The Company will reimburse these banks, brokers, trusts or other nominees for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.

Stockholder List

A list of the Company stockholders entitled to vote at the special meeting will be available for examination by any Company stockholder at the special meeting. At least ten days prior to the date of the special meeting, this stockholder list will be available for inspection by the Company stockholders, subject to compliance with applicable provisions of Delaware law, during ordinary business hours at our corporate offices located at 400 Atlantic Street, 8th Floor, Stamford, Connecticut 06901.

Voting Agreements

Concurrently with the execution of the merger agreement, Parent entered into the voting agreements with the voting agreement stockholders. The voting agreement stockholders collectively beneficially owned, as of August 22, 2018, approximately 22.5% of the issued and outstanding shares of Company common stock. Pursuant to the voting agreements, the voting agreement stockholders agreed to:

Each of the voting agreements terminates on the earliest of the termination of the merger agreement in accordance with its terms and certain other events.

See the section of this proxy statement entitled “The Voting Agreements” beginning on page 106 for further discussion of the terms of the voting agreements. Copies of the voting agreements are also attached to this proxy statement as Annex E-1 and Annex E-2.

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Questions and Additional Information

If you have more questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please call our proxy solicitor, Morrow Sodali LLC, toll-free at (800) 662-5200.

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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

As discussed elsewhere in this proxy statement, the Company stockholders will consider and vote on a proposal to adopt the merger agreement. You should carefully read this proxy statement in its entirety for more detailed information concerning the merger agreement and the merger. In particular, you should read in its entirety the merger agreement, which is attached as Annex A to this proxy statement. For additional information, see the sections entitled “The Merger,” beginning on page 30, and “The Agreement and Plan of Merger,” beginning on page 81.

The Board unanimously recommends that the Company stockholders vote “FOR” the proposal to adopt the merger agreement.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of Company common stock represented by such proxy card will be voted “FOR” the proposal to adopt the merger agreement.

The approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Company common stock entitled to vote on such proposal.

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PROPOSAL 2: NON-BINDING COMPENSATION ADVISORY PROPOSAL

Under Section 14A of the Exchange Act, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are required to provide stockholders the opportunity to vote to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the merger, as disclosed in the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger—Golden Parachute Compensation,” beginning on page 71, including the table entitled “Golden Parachute Payments” and accompanying footnotes. Accordingly, the Company stockholders are being provided with the opportunity to cast an advisory vote on such payments.

As an advisory vote, this proposal is not binding upon the Company, the Board or Parent or any of the Company’s or Parent’s subsidiaries and approval of this proposal is not a condition to completion of the merger. Because the merger-related executive compensation to be paid in connection with the merger is based on the terms of the merger agreement as well as the contractual arrangements with the named executive officers, such compensation will be payable, regardless of the outcome of this advisory vote, if the merger agreement is adopted and the merger is completed (subject only to the contractual conditions applicable thereto). However, the Company seeks your support and believes that your support is appropriate because the Company has a comprehensive executive compensation program designed to link the compensation of our executives with the Company’s performance and the interests of the Company stockholders. Accordingly, we ask that you vote on the following resolution:

“RESOLVED, that the stockholders of The Navigators Group, Inc. approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to the named executive officers of The Navigators Group, Inc. that is based on or otherwise relates to the merger, as disclosed pursuant to Item 402(t) of Regulation S-K in the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger—Golden Parachute Compensation,” beginning on page 71 (which disclosure includes the Golden Parachute Compensation Table required pursuant to Item 402(t) of Regulation S-K).”

The Board unanimously recommends that the Company stockholders vote “FOR” the non-binding compensation advisory proposal.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of Company common stock represented by such proxy card will be voted “FOR” the non-binding compensation advisory proposal.

The approval of the non-binding compensation advisory proposal requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. The vote is advisory only and, therefore, not binding on the Company or Parent or any of their respective subsidiaries, and, if the merger agreement is adopted by the Company stockholders and the merger is completed, the compensation that is based on or otherwise relates to the merger will be payable to our named executive officers even if this proposal is not approved.

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PROPOSAL 3: AUTHORITY TO ADJOURN THE SPECIAL MEETING

Company stockholders may be asked to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

The Board unanimously recommends that stockholders vote “FOR” the proposal to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of Company common stock represented by such proxy card will be voted “FOR” the proposal to adjourn the special meeting to a later date or time if necessary or appropriate.

The approval of the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. In addition, even if a quorum is not present at the special meeting, the affirmative vote of holders of a majority of the shares of Company common stock present in person or represented by proxy at the special meeting entitled to vote on such matter may adjourn the meeting to another place, date or time.

Even if the proposal to adjourn the special meeting is not approved by the Company stockholders, under the Amended and Restated By-Laws of the Company (the “Company by-laws”) the special meeting may be adjourned to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement, by the chairman of the meeting, after consultation with Parent and as otherwise permitted under the merger agreement.

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THE MERGER

Overview

The Company is seeking the adoption by the Company stockholders of the merger agreement the Company entered into on August 22, 2018 with Parent and Merger Sub. Under the terms of the merger agreement, subject to the satisfaction or waiver of specified conditions, Merger Sub will merge with and into the Company. The Company will survive the merger as a wholly owned subsidiary of Parent. The Board has approved the merger agreement and unanimously recommends that the Company stockholders vote “FOR” the proposal to adopt the merger agreement.

Upon completion of the merger, each share of Company common stock that is issued and outstanding immediately prior to the effective time of the merger (other than (i) shares owned by the Company, Parent, Merger Sub or any of their respective wholly owned subsidiaries and (ii) shares held by stockholders who have not voted in favor of the merger and who shall have properly and validly perfected their statutory rights of appraisal in respect of such shares in accordance with Section 262 of the DGCL) will be cancelled and automatically converted into the right to receive $70.00 per share in cash, without interest, subject to any applicable withholding taxes.

Following the completion of the merger, the Company will cease to be a publicly traded company and will become a wholly owned subsidiary of Parent.

Background of the Merger

The Board and Company management regularly evaluate the Company’s long-term strategic plans and objectives, and have, from time to time, considered a range of financial and strategic opportunities to enhance stockholder value, including various investments and divestitures, potential business combinations and other strategic transactions. Such evaluation and consideration include a discussion of macro trends impacting the Company and the insurance industry, such as insurance industry consolidation, changes in the insurance distribution model, increasing presence of alternative capital in the insurance sector, and the pricing environment in the specialty and property catastrophe lines of business and their potential impact on the Company’s objectives and ability to create stockholder value.

In the spring of 2014, representatives of Parent approached representatives of the Company and asked whether the Company would consider a potential strategic transaction with Parent. Company management indicated the minimum pricing terms under which a transaction would be considered, and, upon Parent’s notional agreement to such terms, agreed to enter into further conversations and undertake limited diligence with Parent regarding a potential transaction. In connection with this process, the Company retained Sidley Austin LLP (referred to as “Sidley”) as the Company’s outside legal advisor and Goldman Sachs as its outside financial advisor. Over the next several months, the Company and Parent engaged in preliminary discussions regarding a potential transaction but were not able to come to an agreement on the material terms of a potential transaction, including price. The Company and Parent ceased these discussions in January 2015.

In the summer of 2015, the Company undertook a process to consider the Company’s strategic goals and certain potential strategic alternatives, including a potential sale of the Company. In connection with this process, the Company continued to engage Sidley and Goldman Sachs as its legal and financial advisors, respectively. At this time, the Company re-engaged with Parent regarding the prior discussions of a potential transaction and additionally engaged in preliminary discussions regarding a potential transaction with a number of other parties. Once again, the Company and Parent were not able to come to an agreement on the material terms of a potential transaction, including price, and in October 2015 the Company and Parent ceased all discussions regarding a potential transaction until 2018.

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In the spring of 2018, the Board again began to discuss in depth the Company’s strategic goals and potential strategic alternatives, including continuing to operate on a standalone basis and a potential sale of the Company. After preliminary discussions of these matters among the members of the Board, the Board determined that the Company should explore, in particular, a potential sale of the Company. The Board further determined that the Company should engage financial advisors to assist the Board in its consideration of strategic alternatives and in the identification of potential acquirers.

On March 15, 2018, the Board resolved to form a transaction committee of the Board (referred to as the “Transaction Committee”), comprised of independent directors Saul L. Basch, Meryl D. Hartzband, Robert V. Mendelsohn and David M. Platter, to assist the Board in carrying out its oversight responsibilities relating to potential mergers, acquisitions, divestitures and other strategic transactions outside the ordinary course of business as would be assigned to the Transaction Committee by the Board, and to provide advice and guidance to management and the Board with respect to the Company’s strategy in respect of any such transaction.

On March 16, 2018, the Transaction Committee held a telephonic meeting in which Stanley A. Galanski, Director and President and Chief Executive Officer of the Company, Ciro M. DeFalco, Chief Financial Officer of the Company, and Emily B. Miner, General Counsel of the Company, participated. The Transaction Committee discussed the qualifications of various financial advisors and determined which advisors should be interviewed as part of the process. Additionally, the Transaction Committee appointed Mr. Mendelsohn as chairman of the Transaction Committee.

On March 22, 2018, Mr. Galanski contacted Christopher J. Swift, Chairman and Chief Executive Officer of Parent, by telephone and Mr. Galanski indicated that, if Parent remained interested in pursuing a potential acquisition of the Company, the Company considered it an appropriate time to re-engage in such discussions.

On March 29, 2018, Mr. Swift contacted Mr. Galanski by telephone to inform Mr. Galanski that Parent was interested in restarting discussions regarding a possible acquisition of the Company. At this time, Mr. Galanski indicated that he expected Parent would have to propose a price that would represent a higher multiple to book value than the multiples discussed by the Company and Parent in 2014 and 2015 for the Board to authorize formal discussions of a potential transaction with Parent.

On April 4, 2018, the Transaction Committee held an in-person meeting at Sidley’s offices in New York, New York, at which Mr. Galanski, Mr. DeFalco, Ms. Miner, and representatives of Sidley were present. The Transaction Committee, Company management and representatives of Sidley reviewed the responsibilities of the Transaction Committee and the directors’ fiduciary duties in the context of considering a potential strategic transaction. The Transaction Committee, Company management and representatives of Sidley then discussed the evaluation of potential financial advisors to the Company, including due diligence with respect to any potential conflicts of interest that could impact each investment bank’s ability to advise the Company in connection with a potential strategic transaction. The Transaction Committee, Company management and representatives of Sidley then met with representatives from four investment banks, each on an individual basis, to discuss the potential engagement of one or more of such investment banks to act as financial advisor to the Company in connection with a potential strategic transaction. Following these meetings, the Transaction Committee resolved to recommend to the Board that the Company engage both Goldman Sachs and Moelis. The Transaction Committee instructed Company management to begin due diligence on Goldman Sachs and Moelis with respect to any potential conflicts of interest and to initiate the negotiation of engagement letters, subject to the Board’s discussion and approval of the engagement of both Goldman Sachs and Moelis.

On April 9, 2018, Mr. Swift contacted Mr. Galanski by telephone to inform Mr. Galanski that Parent was willing to engage in discussions regarding a potential acquisition of the Company. During this discussion, Mr. Swift made an oral preliminary proposal for Parent to acquire the Company for approximately 1.55x book value, and further requested that the parties enter into an exclusivity agreement to enable continued discussions, but indicated that Parent’s due diligence of the Company could support a revised proposal from Parent to acquire the Company at a higher multiple to book value.

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On April 11, 2018, the Board held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of Sidley were present. The Transaction Committee provided a report on the April 4, 2018 meetings with representatives of potential financial advisors and ongoing due diligence on Goldman Sachs and Moelis, including with respect to potential conflicts of interest, and its recommendation that the Board engage Goldman Sachs and Moelis as co-financial advisors. The Board considered the qualifications of each investment bank to serve as a financial advisor and evaluated each investment bank on various criteria, including, among other things, its past relationship with and knowledge of the Company, its expertise in the insurance industry, its capacity as a full-service investment bank (in the case of Goldman Sachs) and the investment banking team’s past experience advising other companies in connection with similar transactions. Based on the foregoing criteria and the report and the recommendation of the Transaction Committee, the Board resolved that the Company would be best served by engaging both Goldman Sachs, considering its market position, international reach and strong organization, deep knowledge of the Company and ability to execute, and Moelis, considering its knowledge of the Company and the market and potentially fewer conflicts, as the Company’s co-financial advisors, subject to the completion of due diligence and the negotiation of acceptable engagement letters. The Board authorized the Transaction Committee, Company management and Sidley to negotiate engagement letters with Goldman Sachs and Moelis for presentation to the Board at its next regularly scheduled meeting. Mr. Galanski provided an update on his recent discussion with Mr. Swift. The Board discussed the process for consideration of a potential strategic transaction, and determined that all informal discussions between the Company and any potential acquirers, including Parent, should cease until the Board had engaged financial advisors to assist in the evaluation of a potential transaction.

On April 20, 2018, Company management and representatives of each of Sidley, Goldman Sachs and Moelis held a meeting to discuss the contemplated process relating to a potential strategic transaction, including a broad list of potential parties to contact, which the Transaction Committee had previously asked Goldman Sachs and Moelis to formulate. The attendees discussed narrowing the broad list of potential parties to a shorter list of the parties that were most likely to be interested in pursuing a potential acquisition of the Company.

On May 9, 2018, the Board held an in-person meeting in Stamford, Connecticut, at which Mr. DeFalco, Ms. Miner, and representatives of each of Sidley, Goldman Sachs and Moelis were present. The Board and representatives of Sidley reviewed the terms of proposed engagement letters with representatives of each of Goldman Sachs and Moelis and potential conflicts disclosure memorandums submitted by each investment bank in connection with their potential engagement. Representatives of each of Goldman Sachs and Moelis then reviewed discussion materials with the Board regarding the current market for insurance business combinations, the recommended process for a potential sale of the Company (in light of the Board’s stated concern with potential informational leaks if they instituted a broad process), potential acquirers, the Company’s strengths and weaknesses as an acquisition target, and the advantages and disadvantages of pursuing a strategic transaction as opposed to continuing as a standalone company. These discussion materials included a list of eight potential acquirers, including Parent, which representatives of each of Goldman Sachs and Moelis believed, based on their professional judgment and experience, were most likely to be interested in pursuing a potential acquisition of the Company. The Board then discussed the information presented by representatives of each of Goldman Sachs and Moelis and the advisability of initiating a formal process to pursue a potential strategic transaction. At the conclusion of these discussions, the Board determined that it was an opportune time to consider strategic alternatives, particularly a potential sale of the Company. Accordingly, the Board instructed Mr. Galanski to engage in more formal discussions with Parent regarding a potential transaction, and instructed the Transaction Committee to work with Goldman Sachs and Moelis to develop and implement a plan for non-public outreach to other potential acquirers.

On May 17, 2018, consistent with the Board’s directives, Mr. Galanski contacted Mr. Swift to confirm that the Company was willing to engage in formal discussions with Parent regarding a potential transaction.

On May 25, 2018, the Transaction Committee held a telephonic meeting, at which Mr. Galanski, Mr. DeFalco and Ms. Miner and representatives of each of Goldman Sachs and Moelis were present, to discuss planned outreach by Goldman Sachs and Moelis to potential acquirers, including continuing conversations with Parent.

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On May 29, 2018, the Board held a telephonic meeting at which Mr. DeFalco, Ms. Miner and representatives of each of Goldman Sachs and Moelis were present, to discuss draft financial projections prepared by Company management. The Board provided instructions to Company management regarding the financial projections, including to solicit input on these projections from the leaders of the Company’s reporting segments.

On May 30, 2018, Parent executed a confidentiality agreement with the Company, which included customary standstill and non-solicitation provisions. Such confidentiality agreement contained an exception to such standstill restriction which allowed Parent to make private requests to the Company to amend, waive, provide consents under or agree not to enforce the standstill restrictions or make private proposals to the Company regarding a potential transaction involving the Company, in each case if the Company shall have entered into a definitive written agreement after May 30, 2018 providing for the acquisition (through stock purchase, tender or exchange offer, merger, business combination or otherwise) of a majority of the securities of the Company or the acquisition of a majority of the consolidated assets of the Company and its subsidiaries.

On June 1, 2018, the Board again held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of each of Goldman Sachs and Moelis were present, to review updated versions of the financial projections. Following discussion of these projections and the underlying assumptions with Company management, the Board approved the financial projections for use in discussions with potential acquirers, including Parent, subject to certain suggested adjustments.

On June 5, 2018, Mr. Galanski, Mr. DeFalco, Ms. Miner and representatives of each of Goldman Sachs and Moelis held an in-person meeting with Mr. Swift and other representatives of Parent to discuss a potential acquisition of the Company by Parent. Parent received an evaluation package containing financial information regarding the Company’s business and a management presentation for the purposes of submitting an initial proposal to acquire the Company. Following the meeting, representatives of Parent reiterated Parent’s interest in acquiring the Company and indicated that Parent intended to spend the next several weeks analyzing a potential transaction, with the goal of submitting a non-binding initial proposal during the first week of July 2018 or closely thereafter. From this date, Parent commenced preliminary due diligence on the Company and representatives of Parent engaged in certain telephonic meetings and email correspondence with select representatives of the Company, as well as with representatives of each of Goldman Sachs and Moelis.

On June 8, 2018, the Transaction Committee held a telephonic meeting at which Mr. Galanski, Mr. DeFalco, Ms. Miner and representatives of each of Goldman Sachs and Moelis were present. The Transaction Committee was provided with a summary of ongoing discussions with Parent. The Transaction Committee and the Company’s financial advisors also discussed the exploration of potential acquirers in addition to Parent. At the conclusion of this meeting, the Transaction Committee directed Goldman Sachs and Moelis to reach out to other potential acquirers to gauge possible interest in a potential transaction with the Company.

Beginning on June 8, 2018, Mr. Galanski and representatives of each of Goldman Sachs and Moelis contacted nine potential acquirers (two of which were on a “no-names” basis and one of which was during general M&A discussions), including Parent, to gauge their respective interests in a potential transaction involving the Company. After such initial contact, only Parent and two other potential strategic partners (referred to as “Party A” and “Party B,” respectively) expressed initial interest in further discussions with the Company. Representatives from Sidley and the Company proceeded to negotiate a confidentiality agreement with Party A, and representatives of each of Goldman Sachs and Moelis proceeded to organize meetings between representatives of the Company and representatives of each of Party A and Party B.

On June 19, 2018, representatives of Goldman Sachs spoke to representatives of Party A to discuss scheduling an in-person meeting between Company management and representatives of Party A regarding a potential transaction. As a result, such meeting was scheduled for July 13, 2018.

On June 20, 2018, the Board held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of Goldman Sachs and Moelis were present. The Board was provided with an update of the strategic review process, including updates on conversations held between representatives of Parent and each of Goldman Sachs and Moelis.

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On June 26, 2018, representatives of each of Goldman Sachs and Moelis discussed preliminary due diligence process and planning with representatives of Parent.

Also on June 26, 2018, representatives of Goldman Sachs spoke to representatives of Party B to discuss scheduling an in-person meeting between Company management and representatives of Party B regarding a potential transaction. As a result, such meeting was scheduled for July 30, 2018.

On June 27 and June 28, 2018, representatives of each of the Company and Parent held telephonic meetings regarding Parent’s due diligence of the Company, including with respect to financial and actuarial matters.

On July 5, 2018, Mr. Swift orally communicated to Mr. Galanski that, based on the preliminary due diligence through that date, Parent was prepared to explore an all-cash acquisition of the Company in which the Company’s stockholders would receive $66.50 for each share of Company common stock. Mr. Swift further requested that the Company agree to execute an exclusivity agreement with Parent for an agreeable term during which the Company would not be permitted to solicit, negotiate or otherwise discuss a transaction with any third parties.

Between July 5 and July 8, 2018, representatives of each of the Company, Goldman Sachs and Moelis contacted representatives of each of Parent and Citigroup Global Markets Inc. (referred to as “Citigroup”), Parent’s financial advisor in connection with the proposed acquisition of the Company, and conveyed Company management’s belief that the price of Parent’s oral proposal to acquire the Company communicated by Mr. Swift on July 5, 2018 was unlikely to be approved by the Board and that Parent should consider increasing its proposed price.

On July 8, 2018, Mr. Swift contacted representatives of the Company to reiterate Parent’s oral proposal to acquire the Company for $66.50 per share of Company common stock, as communicated by Mr. Swift on July 5, 2018, and to indicate that Parent remained interested in acquiring the Company.

On July 9, 2018, the Transaction Committee held a telephonic meeting, at which Mr. Galanski, Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Company management and representatives of Goldman Sachs reported on the status of discussions with each of Parent and Party A, including Parent’s oral proposal communicated by Mr. Swift on July 5, 2018, and the meeting with representatives of Party A scheduled for July 13, 2018. Following discussion, the Transaction Committee asked Goldman Sachs and Moelis to prepare a financial analysis of the Company and the proposed transaction with Parent for presentation to the Transaction Committee and the Board. The Transaction Committee also instructed Company management to move forward with the planned meeting with representatives of Party A on July 13, 2018, and instructed representatives of Goldman Sachs to inform Parent that the Board was considering its oral proposal and planned to respond within one week.

On July 11, 2018, Party A executed a confidentiality agreement with the Company, including customary standstill and non-solicitation provisions.

On July 13, 2018, Mr. Galanski, Mr. DeFalco and representatives of each of Goldman Sachs and Moelis held an in-person meeting with representatives of Party A to discuss a potential acquisition of the Company by Party A. Party A received an evaluation package containing financial information regarding the Company’s business and a management presentation for the purposes of submitting an initial proposal to acquire the Company. At this meeting, representatives of Party A indicated that they were in the process of integrating a recently acquired company, but were interested in having additional discussions with the Company regarding a potential transaction. During this meeting, follow-up discussions were planned between Party A and representatives of each of Goldman Sachs and Moelis for the following week.

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On July 14, 2018, the Transaction Committee held a telephonic meeting, at which Mr. Galanski, Mr. DeFalco, Ms. Miner and representatives of Sidley, Goldman Sachs and Moelis were present. Representatives of each of Goldman Sachs and Moelis provided an update on discussions with representatives of each of Parent and Party A. Representatives of each of Goldman Sachs and Moelis also presented a detailed review of the progress of the strategic review process, its financial analysis of the Company and Parent’s oral proposal to acquire the Company for $66.50 per share of Company common stock. After extensive discussion of Parent’s oral proposal and the advantages and disadvantages of negotiating exclusively with Parent, the Transaction Committee unanimously agreed to recommend to the Board that the Company submit a counterproposal to Parent providing that the Company would negotiate exclusively with Parent through August 8, 2018 (the planned date for the announcement of the Company’s earnings for its most recently completed fiscal quarter) at a transaction price of $72.50 per share of Company common stock and subject to the inclusion of a post-signing “go-shop” period in the merger agreement. The Transaction Committee also agreed to recommend to the Board that it instruct Company management to develop a communications plan to address any informational leaks about the ongoing negotiations with Parent.

On July 15, 2018, the Board held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. The Transaction Committee summarized Parent’s oral proposal of $66.50 per share of Company common stock and the Transaction Committee’s recommended counterproposal to Parent. Representatives of each of Goldman Sachs and Moelis then provided an update on discussions with Parent and Party A, and presented a detailed review of the progress of the strategic review process, a preliminary financial analyses of each of the Company’s intrinsic value and the value implied by Parent’s oral proposal to acquire the Company for $66.50 per share of Company common stock. The Board and representatives of each of the Company’s legal and financial advisors then discussed Parent’s oral proposal, the Company’s intrinsic value, the advisability of agreeing to negotiate exclusively with Parent and the possible go-shop period. At the conclusion of these discussions, the Board unanimously resolved to instruct Company management to submit an oral counterproposal to Parent of $72.50 per share of Company common stock, and otherwise agreeing to enter into an exclusivity agreement prohibiting the Company from soliciting, negotiating or otherwise discussing a potential sale of the Company with any third parties through August 8, 2018 and a post-signing go-shop period, and to communicate that if Parent refuses these terms the Company was willing to continue negotiations on a non-exclusive basis or to consider a counterproposal from Parent.

On July 16, 2018, Mr. Galanski contacted Mr. Swift by telephone to present the Company’s oral counterproposal as approved by the Board the previous day. Later that day, Mr. Swift presented Parent’s oral counterproposal to acquire the Company for $69.50 per share of Company common stock on the terms and conditions proposed by Mr. Galanski earlier that day, subject to the negotiation of an acceptable termination fee.

Later on July 16, 2018, the Transaction Committee held a telephonic meeting, at which Mr. Galanski, Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Mr. Galanski reported Parent’s revised oral counterproposal to acquire the Company for $69.50 per share of Company common stock. After discussion with representatives of each of the Company’s advisors, the Transaction Committee instructed Company management to contact Mr. Swift to determine whether Parent appeared willing to consider a counterproposal to acquire the Company for $70.00 per share of Company common stock, subject to the other terms and conditions proposed by Mr. Galanski to Mr. Swift earlier that day.

Following the Transaction Committee meeting, on July 16, 2018, Mr. Galanski contacted Mr. Swift by telephone to discuss the Company’s possible counterproposal as outlined by the Transaction Committee.

Later on July 16, 2018, the Board held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Mr. Galanski provided an update on the discussions with Mr. Swift and the various oral counterproposals and the Transaction Committee provided its recommendations with respect to the Company’s tentative counterproposal. The Board and representatives of each of the Company’s legal and financial advisors discussed the suggested counterproposal that Parent acquire

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the Company for $70.00 per share of Company common stock, which represented approximately 1.8x the Company’s tangible book value as of June 30, 2018 and an approximately 21.8% premium over the closing price of the Company’s stock on July 12, 2018 of $57.45. At the conclusion of these discussions, the Board unanimously resolved to instruct Company management and its financial advisors to submit a counterproposal to Parent to acquire the Company for $70.00 per share of Company common stock, subject to the other terms and conditions proposed by Mr. Galanski to Mr. Swift earlier that day, including a go-shop period.

Following the Board meeting, on July 16, 2018, Mr. Galanski spoke to Mr. Swift by telephone to present the Company’s counterproposal, as approved by the Board earlier that day. Mr. Swift accepted the Company’s counterproposal on behalf of Parent. Following this conversation, Ms. Miner delivered a draft exclusivity agreement (referred to as the “exclusivity agreement”) to David C. Robinson, General Counsel of Parent. From July 17 to July 20, 2018, representatives of each of the Company, Sidley, Goldman Sachs and Moelis, on one hand, and representatives of each of Parent and Mayer Brown LLP (referred to as “Mayer Brown”), Parent’s outside legal advisor, on the other hand, negotiated the terms of the exclusivity agreement. In the course of such negotiations, Mr. Galanski and Ms. Miner indicated to Mr. Swift and Mr. Robinson that exclusivity under the exclusivity agreement would be subject to agreement on the proposed price of $70.00 per share of Company common stock and the inclusion of a go-shop period in the definitive agreement with respect to the proposed transaction.

On July 17, 2018, representatives of each of Goldman Sachs and Moelis spoke to representatives of each of Parent and Citigroup by telephone and email regarding due diligence of the Company, retention of key employees of the Company and the exclusivity agreement.

On July 17, 2018, Moelis delivered a revised potential conflicts memorandum to the Company and Sidley. The revised potential conflicts memorandum was made available to the Board soon thereafter.

On July 19, 2018, Parent received access to the Company’s virtual data room for the purpose of conducting due diligence on the Company.

On July 20, 2018, Parent entered into the exclusivity agreement with the Company which prohibited the Company from soliciting, negotiating or otherwise discussing a potential sale of the Company with any third parties through August 8, 2018, unless earlier terminated by mutual agreement of the Company and Parent or upon Parent’s delivery of written notice to the Company stating that it is unwilling or unable to enter into a definitive agreement or consummate a potential transaction on the following terms and conditions: (i) a price of $70.00 per share of Company common stock, (ii) the execution of a definitive merger agreement on or before August 8, 2018, and (iii) the inclusion of a go-shop period in the definitive merger agreement on terms to be mutually agreed by the parties. In light of the execution of the exclusivity agreement with Parent, additional talks with Party A were put on hold and a meeting with Party B, which had been scheduled for July 30, 2018 was cancelled.

On July 20 and July 23, 2018, management presentations were held in Stamford, Connecticut and were attended by Company management and representatives of each of Parent, Citigroup, Goldman Sachs and Moelis. From July 20 to July 31, 2018, representatives of the Company and Parent held numerous telephonic meetings and in-person meetings in both Stamford, Connecticut and London, England regarding Parent’s due diligence of the Company, including with respect to financial, actuarial and employee matters. At the meetings that took place on July 25 and 26, 2018 in London, England, representatives of each of Goldman Sachs, Moelis and Citigroup were also present.

On July 23, 2018, Ms. Miner delivered an initial draft merger agreement to Mr. Robinson, which, among other things, (i) provided for a 45-day go-shop period during which the Company would be allowed to solicit acquisition proposals, subject to an extended period for the Company to negotiate with “excluded parties” who submit acquisition proposals during the go-shop period, (ii) provided for a termination fee, or a reduced termination fee in connection with the go-shop, in amounts to be discussed and (iii) contemplated that certain stockholders of the Company would execute a voting agreement in connection with the proposed transaction.

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On July 26, 2018, the Board held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Company management and representatives of each of Goldman Sachs and Moelis provided an update on negotiations with Parent and Parent’s due diligence of the Company. The Board’s fiduciary duties in connection with the proposed transaction were discussed, and representatives of Sidley provided the Board with a detailed summary of the terms in the initial draft merger agreement delivered to Parent on July 23, 2018, including a discussion that Parent would likely expect directors Terence Deeks and Marc Tract (as trustee of the Deeks family trusts), certain members of Mr. Deeks’ family and the Deeks Family Foundation, as significant holders of Company common stock, to execute a voting agreement in connection with the proposed transaction.

Also on July 26, 2018, Mr. Deeks and Mr. Tract requested that the Company pay any legal fees incurred by them individually in connection with the proposed voting agreement.

Later on July 26, 2018 and again on July 27, 2018, Mr. Galanski and Mr. Swift spoke by telephone to discuss, among other things, employee benefits arrangements for the Company’s employees following the closing of the proposed transaction and the treatment of Company equity awards in connection with the proposed transaction. During these conversations, Mr. Swift proposed to Mr. Galanski that (i) all unvested Company equity awards would be converted into equivalent Parent equity awards in the proposed transaction and (ii) that all of the Company’s employee benefit plans would be terminated and all Company employees would be moved to Parent’s existing employee benefits plans upon the consummation of the proposed transaction.

On July 29, 2018, the Transaction Committee held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Mr. Galanski reported Parent’s July 27, 2018 proposal regarding the treatment of Company equity awards and Company benefits plans in the potential transaction and the expectation that Mr. Galanski would execute a voting agreement in connection with the proposed transaction. The Transaction Committee and the Company’s financial advisors discussed such proposal. At the conclusion of these discussions, the Transaction Committee instructed Company management to submit a counterproposal to Parent providing that (i) all vested and unvested Company equity awards would be cashed out in the proposed transaction and (ii) Company employee benefits plans would remain in place for a period of at least one year following the consummation of the proposed transaction. The Transaction Committee further instructed Company management to continue negotiations with Parent on such issues. Also at this meeting, the Transaction Committee discussed and approved the request from Mr. Deeks and Mr. Tract that the Company pay any legal fees incurred by them individually in connection with the proposed voting agreement.

Also on July 29, 2018, representatives of Mayer Brown sent a revised draft merger agreement and an initial draft voting agreement for the Deeks stockholders and Mr. Galanski to Sidley. The revised draft merger agreement provided for, among other things, (i) a 30-day go-shop period, subject to a 10-day extended negotiation period for the Company to negotiate with excluded parties, and (ii) a termination fee of 4% of the equity value of the proposed transaction, or 2% under certain circumstances in connection with the go-shop or a transaction with an excluded party.

On July 30, 2018, representatives of each of Mayer Brown and Sidley spoke by telephone to discuss the draft merger agreement.

Also on July 30, 2018, Mr. Galanski had an in-person meeting with Mr. Swift, during which Mr. Galanski conveyed the position of the Transaction Committee from July 29, 2018, including in respect of their position that (i) all vested and unvested Company equity awards would be cashed out in the proposed transaction and (ii) Company employee benefits plans would remain in place for a period of at least one year following the consummation of the proposed transaction. They also discussed the status of the employee retention arrangements and other diligence matters.

On July 31, 2018 and August 1, 2018, representatives of each of Mayer Brown, Sidley and Ballard Spahr (referred to as “Ballard Spahr”), counsel to Mr. Deeks and Mr. Tract in connection with the voting agreement, held a number of telephonic meetings to discuss the draft voting agreement.

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On July 31, 2018, Mr. Galanski and Mr. Swift spoke by telephone regarding Parent’s due diligence of the Company and certain employee retention arrangements. During this conversation, Mr. Swift indicated that he did not believe that Parent would be prepared to execute a definitive merger agreement until at least 10 days after the expiration of the exclusivity period on August 8, 2018 because Parent required more time and information to complete due diligence on the Company and also had significant concerns about the status of employee retention arrangements with certain key employees of the Company.

On August 2, 2018, the Transaction Committee held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Mr. Galanski reported on his recent conversation with Mr. Swift, including that Parent would likely not be prepared to execute a definitive merger agreement prior to the expiration of the exclusivity period on August 8, 2018 at a price of $70.00 per share of Company common stock. After discussion, the Transaction Committee instructed Sidley to continue negotiations of the merger agreement and instructed management to continue discussions with Parent on due diligence of the Company.

Later on August 2, 2018, the Board held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present, during which the Board was provided an update on Mr. Galanski’s recent conversation with Mr. Swift.

Also on August 2, 2018, representatives of Sidley sent a revised draft merger agreement to Mayer Brown providing for, among other things, (i) a 30-day go-shop period, subject to a 10-day extended negotiation period for the Company to negotiate with excluded parties and further extended negotiations periods to allow the Company to continue negotiations with an excluded party and Parent, should Parent submit matching revised proposals in response to such excluded party’s acquisition proposals, and (ii) a termination fee of 3% of the equity value of the proposed transaction, or 1.25% under certain circumstances in connection with the go-shop or a transaction with an excluded party.

Further on August 2, 2018, representatives of Ballard Spahr sent a revised draft voting agreement to Mayer Brown.

On August 3, 2018, representatives of Sidley sent a summary of the outstanding material issues in the draft merger agreement to Mayer Brown.

Also on August 3, 2018, Mr. Galanski spoke to Mr. Swift by telephone regarding the status of negotiations of the proposed transaction. Mr. Galanski reiterated the Board’s position that (i) all vested and unvested Company equity awards would be cashed out in the proposed transaction and (ii) Company employee benefits plans would remain in place for a period of at least one year following the consummation of the proposed transaction. Mr. Swift again conveyed Parent’s concerns that the retention agreements with key employees of the Company had not been finalized, noted that certain items in Parent’s due diligence of the Company remained open and stated that Parent was revising its proposal to acquire the Company by reducing the proposed price to $68.00 per share of Company common stock. He further stated that at this price, Parent would be willing to execute a definitive merger agreement before the expiration of the exclusivity period on August 8, 2018.

Later on August 3, 2018, the Board held a telephonic meeting, at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Mr. Galanski reported his discussion with Mr. Swift from earlier that day, including Parent’s revised proposal to acquire the Company for $68.00 per share of Company common stock. Representatives of Moelis also reported their conversations with representatives of Parent regarding due diligence on the Company and the proposed price reduction. The Board, Company management and representatives of each of its legal and financial advisors engaged in an extensive discussion of the revised price of $68.00 per share of Company common stock. At the conclusion of these discussions, the Board concluded that it would require more information to determine if a price of $68.00 per share of Company common stock was appropriate and fair to the Company stockholders. The Board therefore determined that it would not be able to approve a transaction with Parent at this price by the expiration of exclusivity on August 8, 2018, but was still willing to approve a transaction at a price of $70.00 per share of Company common stock at that time. Accordingly, the Board instructed Company management to inform Parent of the Board’s response to their revised proposal and to continue to engage in discussions and due diligence with

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Parent regarding the potential transaction. The Board also instructed Moelis and Goldman Sachs to prepare a financial analysis of a transaction with Parent at $68.00 per share of Company common stock.

On August 4, 2018, Mr. Galanski spoke with Mr. Swift by telephone to present the Board’s response to Parent’s revised proposal. Later that day, Mr. Galanski and Mr. Swift discussed Parent’s ongoing due diligence of the Company. Also later that day, representatives of each of Goldman Sachs, Moelis, Parent and Citigroup spoke by telephone several times to discuss the price of, and the treatment of the equity awards in, the proposed transaction and finalization of the employee retention arrangements prior to the signing of the merger agreement.

On August 5, 2018, representatives of the Company, Goldman Sachs and Moelis, spoke to representatives of Parent and Citigroup by telephone numerous times, during which the parties agreed to pause discussions on the potential transaction and to continue negotiations and Parent’s due diligence of the Company after the expiration of exclusivity and the release of the Company’s earnings on August 8, 2018.

After the close of U.S. financial markets on August 8, 2018, the Company announced its earnings for the second fiscal quarter of 2018 and on August 9, 2018, the Company held a conference call to discuss earnings with investors. The closing price of Company common stock on August 8, 2018 immediately prior to the announcement of earnings was $58.50. In the period between the announcement of earnings on August 8, 2018 and August 21, 2018, which was the last day of trading of Company common stock before the announcement of the merger, the Company’s stock price increased from $58.60 to $64.25, reaching an all-time high closing price of $65.55 on August 16, 2018.

On August 10, 2018, Mr. Swift communicated to Mr. Galanski that Parent would consider delivering a revised proposal following additional due diligence on outstanding financial and operational items.

On August 13, 2018, representatives of each of the Company and Parent held an in-person meeting in Stamford, Connecticut to discuss open questions related to Parent’s due diligence of the Company. Following this meeting there were various emails and phone calls between representatives of each of the Company and Parent to discuss matters related to Company employees and Company benefits plans.

On August 14, 2018, Mr. Galanski and Mr. Swift spoke by telephone regarding the price and other terms and conditions of the proposed transaction. Mr. Swift presented a revised proposal from Parent to acquire the Company for $70.00 per share of Company common stock, subject to (i) the execution of a definitive merger agreement by August 22, 2018, (ii) an agreement on the amount of the termination fees in the context of the go-shop, a transaction with an excluded party and otherwise, (iii) an agreement on the treatment of Company equity awards and Company benefits plans in the proposed transaction and (iv) finalization of the employee retention arrangements prior to the execution of the merger agreement. Mr. Galanski indicated that he would discuss this revised proposal with the Board.

On August 15 and August 16, 2018, representatives of each of Sidley and Mayer Brown spoke by telephone and corresponded by email to discuss the merger agreement and various related documents.

Also on August 15, 2018, the Board held a telephonic meeting at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Mr. Galanski reported the revised proposal at a price of $70.00 per share of Company common stock presented by Mr. Swift the previous day. The Board, Company management and representatives of each of its legal and financial advisors then discussed the recent increase in the market price of Company common stock, and its impact on the fairness of the proposed transaction to the Company’s stockholders, and the inclusion of the go-shop in the merger agreement to assess whether the proposed transaction with Parent maximized stockholder value at that time. Representatives of each of Goldman Sachs and Moelis then reported that representatives of each of Party A and Party B had contacted the Company’s financial advisors to inquire about the status of the Company’s strategic review process, but had not indicated any firm desire to submit a proposal or engage in further due diligence. The Board and representatives of Sidley also discussed whether Mr. Galanski, as the Company CEO, or Mr. Deeks and Mr. Tract, as significant stockholders, had any conflicts of interest in consideration of the proposed transaction. The Board determined that the interests of Mr. Galanski, Mr. Deeks and Mr. Tract were generally aligned with those of the Company’s

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public stockholders, and noted that none of them served on the Transaction Committee. At the conclusion of discussions, the Board resolved to accept Parent’s revised proposal to acquire the Company for $70.00 per share of Company common stock, subject to (i) the execution of an agreement by August 22, 2018, (ii) an agreement on the amount of the termination fees in the context of the go-shop, a transaction with an excluded party and otherwise and (iii) an agreement on the treatment of Company equity awards and Company benefits plans, and to instruct Company management and the Company’s legal and financial advisors to continue negotiation with representatives of Parent on those terms.

On August 16, 2018, representatives of Mayer Brown sent a revised draft merger agreement to Sidley providing for, among other things, a termination fee of 4% of the equity value of the proposed transaction, or 2% under certain circumstances in connection with the go-shop or a transaction with an excluded party.

Also on August 16, 2018, representatives of Mayer Brown sent a revised draft voting agreement to Ballard Spahr.

On August 17, 2018, Goldman Sachs delivered a revised potential conflicts memorandum to Sidley and the Company, which was subsequently made available to the Board.

From August 17 to August 21, 2018, Ms. Miner, Mr. Robinson and representatives of each of Sidley and Mayer Brown spoke by telephone and corresponded by email numerous times regarding the draft merger agreement and related documents, the Company’s and Parent’s respective filings with the SEC in connection with the execution of the merger agreement, anticipated regulatory filings and related matters.

On August 18, 2018, representatives of Sidley sent a revised draft merger agreement and related documents to Mayer Brown providing for, among other things, a termination fee of 3.25% of the equity value of the proposed transaction, or 1.5% under certain circumstances in connection with the go-shop or a transaction with an excluded party.

On August 19, 2018, the Transaction Committee held a telephonic meeting at which Mr. Galanski, Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Ms. Miner and representatives of Sidley provided an update on the negotiations of the merger agreement, indicating that the material outstanding issues were the termination fee (including the reduced termination fee under certain circumstances in connection with the go-shop or a transaction with an excluded party), the treatment of Company equity awards in the proposed transaction and Company benefits plans after the consummation of the proposed transaction. Representatives of Sidley reported that Parent had continually proposed a termination fee of 4% of the equity value of the proposed transaction, or 2% for termination under certain circumstances in connection with the go-shop or a transaction with an excluded party. After discussion among the Transaction Committee, Company management and representatives of each of its legal and financial advisors, the Transaction Committee instructed Company management and Sidley to propose a termination fee of 3.5% of the equity value of the proposed transaction, or 1.75% for termination under certain circumstances in connection with the go-shop or a transaction with an excluded party. Company management and the Board also discussed the treatment of Company equity awards and Company benefits plans in connection with the proposed transaction. After discussion, the Transaction Committee instructed Company management to continue negotiations with Parent on their recommended terms. Subsequently, representatives of Sidley provided a summary of the proposed Company by-laws, which included, among other things, an exclusive forum provision. After discussion of the Company by-laws, the Transaction Committee and Company management reviewed the Company’s draft press release for the anticipated announcement of the proposed transaction.

Also on August 19, 2018, representatives of Ballard Spahr and Mayer Brown held a telephonic meeting to discuss the draft voting agreement.

Later on August 19, 2018, representatives of Sidley requested that representatives of Mayer Brown prepare a separate voting agreement for Mr. Galanski.

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On August 20, 2018, representatives of Mayer Brown sent a revised draft merger agreement and related documents to Sidley providing for, among other things, a termination fee of 4% of the equity value of the proposed transaction, or 2% under certain circumstances in connection with the go-shop or a transaction with an excluded party.

Later on August 20, 2018, representatives of Ballard Spahr sent to Mayer Brown a revised draft Deeks voting agreement. On the same day, representatives of Mayer Brown sent to Sidley an initial draft of the voting agreement for Mr. Galanski.

Also on August 20, 2018, the Board held a telephonic meeting at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Representatives of Sidley reported on the status of negotiations of the merger agreement, noting that the material outstanding issues were the termination fee, including the reduced termination fee during or resulting from the go-shop or a transaction with an excluded party and matters related to continuing employees, and provided a summary of material changes to the merger agreement since the initial draft reviewed by the Board on July 26, 2018. Representatives of Sidley also provided a summary of the terms of the voting agreements. The Board and representatives of each of the Company’s legal and financial advisors also discussed the logistics of the go-shop period and the potential acquirers that would be contacted by representatives of each of Goldman Sachs and Moelis. Following this discussion, representatives of Goldman Sachs presented their preliminary financial analysis of the proposed transaction, followed by a presentation by representatives of Moelis on their financial analysis of the proposed transaction. The Board, Company management and representatives of each of its legal and financial advisors then reviewed the Company’s draft press release for the anticipated announcement of the merger. Representatives of Sidley then reviewed the Company by-laws and discussed the updated potential conflicts memorandums provided by Moelis on July 17, 2018 and Goldman Sachs on August 17, 2018. Thereafter, the Compensation Committee provided a summary of the employee agreements and president’s awards, which had been subject to extensive discussion by the Compensation Committee over the prior weeks and which had been previously distributed to the proposed recipients for their review, pending Board approval. At the conclusion of the meeting, the Board decided that they would review the materials related to the merger, including the merger agreement and related documents and the presentations of representatives of each of Goldman Sachs and Moelis, the Company by-laws and the employee agreements and presidents awards, and would reconvene the following evening to vote on these matters.

Later on August 20, 2018, Mr. Galanski spoke to Mr. Swift by telephone regarding the outstanding issues discussed with the Transaction Committee the previous day and the Board earlier that evening. Mr. Galanski presented the position of the Transaction Committee on the termination fees, as discussed at the previous day’s Transaction Committee meeting. At the conclusion of this conversation, Mr. Galanski and Mr. Swift agreed to a termination fee of 3.25% of the equity value of the proposed transaction, or $68.25 million, and a reduced termination fee of 2% of the equity value of the proposed transaction, or $42 million, under certain circumstances in connection with the go-shop or a transaction with an excluded party. Mr. Galanski and Mr. Swift also agreed that all of the employee retention arrangements would be finalized prior to the signing of the merger agreement and that Company benefit plans would terminate upon the consummation of the proposed transaction but that Parent would provide subsidies through December 31, 2019 to offset certain increases in benefits costs to U.S.-based Company employees who remain employed by the surviving corporation following the consummation of the proposed transaction.

Also on August 20, 2018, Moelis delivered a revised potential conflicts disclosure memorandum to the Company and Sidley, which was delivered to the Board for their review.

From August 20 to August 22, 2018, representatives of each of the Company, Parent, Sidley and Mayer Brown spoke by telephone and corresponded by email multiple times regarding the Company’s and Parent’s respective press releases and other communication materials related to the anticipated announcement of the proposed transaction.

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Throughout the day on August 21, 2018, representatives of each of Sidley and Mayer Brown exchanged drafts of the merger agreement and related documents.

On August 21, 2018, the Board held a telephonic meeting at which Mr. DeFalco, Ms. Miner and representatives of each of Sidley, Goldman Sachs and Moelis were present. Representatives of each of Goldman Sachs and Moelis provided their respective firms’ updated financial analyses of the final financial terms of the proposed transaction and provided an overview of the go-shop process, which would begin immediately after signing. Representatives of Goldman Sachs then presented their oral opinion, subsequently confirmed in its written opinion dated as of August 22, 2018, that, as of the date of Goldman Sachs’ written opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the merger consideration to be paid to the Company’s stockholders (other than Parent and its affiliates) pursuant to the merger agreement, was fair from a financial point of view to such stockholders. Representatives of Moelis then delivered Moelis’ written opinion that, based upon the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Moelis in connection with its opinion, the merger consideration was fair from a financial point of view to the Company’s stockholders (other than the parties to the voting agreements). Representatives of Sidley discussed the transaction terms with the Board, and the Board considered near-final drafts of the merger agreement and related documents. The Compensation Committee then unanimously resolved to approve the employee agreements and president’s awards agreements. Upon consideration of the recommendation and resolution of the Compensation Committee, the Board unanimously resolved to approve the employee agreements and the president’s awards. Upon consideration of the Company by-laws, as presented at the previous day’s Board meeting, the Board unanimously resolved to adopt the Company by-laws with immediate effect. Upon consideration of the analysis of the Company’s financial advisors, the Board unanimously determined that the merger agreement and the transactions contemplated thereby were fair to, and in the best interests of, the Company and its stockholders, approved and declared advisable the merger agreement and the transactions contemplated thereby, resolved to submit the merger agreement to the Company’s stockholders for adoption and resolved to recommend adoption of the merger agreement to the Company’s stockholders.

Prior to the open of U.S. financial markets on August 22, 2018, (i) the Company, Parent and Merger Sub executed the merger agreement, (ii) Parent, Mr. Deeks, Monica J. Deeks, Mr. Tract (as trustee for the Deeks family trusts) and the Deeks Family Foundation executed the Deeks voting agreement and (iii) Parent and Mr. Galanski executed the Company CEO voting agreement, in each case effective as of August 22, 2018, and each of the Company and Parent issued press releases announcing the merger. The go-shop period began upon the execution of the merger agreement.

From August 22, 2018, representatives of each of Goldman Sachs and Moelis contacted 44 potential acquirers, including all of the parties contacted in June 2018 other than Parent. On August 23, 2018, representatives of each of Party A and Goldman Sachs spoke by telephone. Representatives of Party A indicated they would not pursue a transaction with the Company as they are still in the process of integrating a recent acquisition, noting their belief that they were unlikely to propose more than $70.00 per share of Company common stock, and their concern that they were not familiar with the Company’s reinsurance business or European operations and that they would not be able to complete due diligence and negotiate a transaction to their satisfaction before the expiration of the go-shop period. As of the date of the preliminary version of this proxy statement, none of the other potential acquirers contacted by representatives of each of Goldman Sachs or Moelis have expressed interest in pursuing a transaction with the Company.

On September 14, 2018, the Transaction Committee held a telephonic meeting at which Mr. Galanski and representatives of each of Sidley, Goldman Sachs and Moelis were present. Representatives of Goldman Sachs and Moelis provided an update on discussions with the potential acquirers contacted during the go-shop period, and noted that none of these potential acquirers had expressed interest in pursuing a transaction with the Company.

The go-shop period expired at 12:01 a.m. (New York City time) on September 21, 2018, with the Company having not received any alternative acquisition proposals during the go-shop period.

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Recommendation of the Board

At the special meeting of the Board held on August 21, 2018, after careful consideration, including detailed discussions with the Company’s management and its legal and financial advisors, the Board unanimously:

Reasons for Recommending the Adoption of the Merger Agreement

In evaluating the merger agreement and the transactions contemplated thereby, including the merger, the Board consulted with the Company’s management and its outside legal and financial advisors and considered and evaluated a variety of factors over the course of over five months and twenty-five meetings of the Board and the transaction committee of the Board since the Board began to explore possible strategic alternatives in March 2018, including the following factors, each of which the Board believed supported a unanimous determination to approve the merger agreement and the transactions contemplated thereby, including the merger, and a unanimous recommendation that Company stockholders vote in favor of adopting the merger agreement:

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In the course of its deliberations, the Board also considered certain risks and other potentially negative factors concerning the transactions contemplated by the merger agreement, including:

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The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive, but includes the material factors considered by the Board. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Board did not undertake to make any specific determination as to whether, or to what extent, any factor, or any particular aspect of any factor, supported or did not support its ultimate determination.

The Board based its recommendation on the totality of the information presented, including the factors described above.

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Forward-Looking Financial Information

Given the unpredictability of the underlying assumptions and estimates inherent in preparing financial projections, the Company does not as a matter of general practice publicly disclose detailed projections as to its anticipated financial position or results of operations, other than providing, from time to time, estimated ranges for the then-current fiscal year of certain expected financial results in its regular earnings press releases and other investor materials.

In connection with the evaluation of a possible transaction, the Company’s management prepared and provided to the Board forward-looking financial information for fiscal years 2018 through 2021 (referred to as the “financial projections”), which are summarized below. The financial projections were also provided to Goldman Sachs and Moelis for their use and reliance in connection with their respective financial analyses and opinions. In connection with Parent’s due diligence investigation, the Company made available to Parent the information that was included in the financial projections. None of the financial projections were intended for public disclosure. A summary of the financial projections is included in this proxy statement only because the financial projections were made available to the Board and the Company’s financial advisors and because portions of the financial projections were also made available to Parent.

The financial projections are unaudited and were not prepared with a view toward public disclosure or compliance with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or generally accepted accounting principles as applied in the U.S. (referred to as “GAAP”) or the published guidelines of the SEC regarding projections and the use of non-GAAP financial measures. Neither the Company’s independent public accountants, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the financial projections, nor have they expressed any opinion or any other form of assurance on the financial projections or their achievability, and they assume no responsibility for, and disclaim any association with, the financial projections. The inclusion of the financial projections in this proxy statement does not constitute an admission or representation by the Company that the information is material.

The financial projections reflect various estimates, assumptions and methodologies of the Company, all of which are difficult to predict and many of which are beyond the Company’s control. In the view of Company management, the financial projections were prepared on a reasonable basis reflecting management’s best available estimates and judgments regarding the Company’s future financial performance. The financial projections are not facts and should not be relied upon as necessarily indicative of actual future results. You are cautioned not to place undue reliance on the financial projections. None of the Company, Parent or any of their respective affiliates, advisors or other representatives assumes any responsibility for the ultimate performance of the Company relative to the financial projections. These considerations should be taken into account in reviewing the financial projections, which were prepared as of an earlier date.

The financial projections are not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable than as set forth below and should not be regarded as a representation that the financial projections will be achieved.

Because the financial projections reflect subjective judgment in many respects, they are susceptible to multiple interpretations and frequent revisions based on actual experience and business developments. The financial projections also cover multiple fiscal years, and such information by its nature becomes less predictive with each succeeding fiscal year. The financial projections constitute forward-looking information and are subject to a wide variety of significant risks and uncertainties that could cause the actual results to differ materially from the projected results. For additional information on factors that may cause the Company’s future financial results to materially vary from the projected results summarized below, see the section entitled “Cautionary Statement Regarding Forward-Looking Statements,” beginning on page 19. Accordingly, there can be no assurance that the projected results summarized below will be realized or that actual results will not differ materially from the

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projected results summarized below, and the financial projections cannot be considered a guarantee of future operating results and should not be relied upon as such. No representation is made by the Company or its affiliates or advisors or any other person to any of the Company’s stockholders or any other person regarding the actual performance of the Company compared to the results included in the financial projections.

The financial projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding the Company contained in the Company’s public filings with the SEC. For a more detailed description of the information available, see the section entitled “Where You Can Find More Information,” beginning on page 119. The financial projections do not take into account the effect of the merger or the failure of the merger to be consummated and should not be viewed in that context.

THE COMPANY HAS NOT AND DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE FINANCIAL PROJECTIONS TO REFLECT ANY EVENTS OCCURRING AFTER THE DATE THE FINANCIAL PROJECTIONS WERE MADE, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH UNAUDITED PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE.

Financial Projections

The following table summarizes the financial projections for each fiscal year ending December 31 indicated below (expressed in millions, except per share data):

Opinions of Our Financial Advisors

Opinion of Goldman Sachs & Co. LLC

At a meeting of the Board held on August 21, 2018, Goldman Sachs rendered to the Board its oral opinion, subsequently confirmed in its written opinion dated August 22, 2018, to the effect that, as of the date of Goldman

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Sachs’ written opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the $70.00 in cash per share to be paid to the holders (other than Parent and its affiliates) of shares of Company common stock pursuant to the merger agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated August 22, 2018, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this proxy statement as Annex B. The summary of Goldman Sachs’ opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the Board in connection with its consideration of the merger and the opinion does not constitute a recommendation as to how any holder of shares of Company common stock should vote with respect to the merger or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

Goldman Sachs also held discussions with members of senior Company management regarding their assessment of the past and current business operations, financial condition and future prospects of the Company; reviewed the reported price and trading activity for the shares of Company common stock; compared certain financial and stock market information for the Company with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the property and casualty insurance industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the consent of the Board, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the Board that the Forecasts have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Company management. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs is not an actuary and its services did not include any actuarial determination or evaluation or any attempt to evaluate actuarial assumptions and it relied on the Company’s actuaries with respect to reserve adequacy. In that regard, Goldman Sachs made no analysis of, and expressed no opinion as to, the adequacy of the loss and loss adjustments expenses reserves of the Company. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger would be obtained without any adverse effect on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs assumed that the

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merger would be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of the Company to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders (other than Parent and its affiliates) of shares of Company common stock, as of the date of the opinion, of the $70.00 in cash per share to be paid to such holders pursuant to the merger agreement. Goldman Sachs did not express any view on, and its opinion does not address, any other term or aspect of the merger agreement, the merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the merger, including, the fairness of the merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company, or class of such persons, in connection with the merger, whether relative to the $70.00 in cash per share to be paid to the holders (other than Parent and its affiliates) of shares of Company common stock pursuant to the merger agreement or otherwise. Goldman Sachs did not express any opinion as to the impact of the merger on the solvency or viability of the Company or Parent or the ability of the Company or Parent to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of the opinion. Goldman Sachs’ advisory services and its opinion were provided for the information and assistance of the Board in connection with its consideration of the merger and the opinion does not constitute a recommendation as to how any holder of shares of Company common stock should vote with respect to the merger or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analyses

The following is a summary of the material financial analyses presented by Goldman Sachs to the Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before August 17, 2018 and is not necessarily indicative of current market conditions.

Analysis of Implied Premiums and Multiples

Goldman Sachs calculated and compared the following premiums, multiples and financial information based on the merger consideration of $70.00 in cash per share to be paid to the holders of shares of Company common stock pursuant to the merger agreement:

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The results of these calculations and comparisons were as follows:

Illustrative Discounted Dividend Analysis

Using the Forecasts, Goldman Sachs performed an illustrative discounted dividend analysis for the Company.

Using a range of discount rates from 8.9% to 10.0%, reflecting estimates of the Company’s cost of equity, Goldman Sachs derived an illustrative equity value of the Company, by discounting to present value as of June 30, 2018, (a) the estimated distributions to the Company stockholders for the two-quarter period ending December 31, 2018 and years 2019 through 2021, as reflected in the Forecasts, and (b) a range of illustrative terminal values for the Company, as of December 31, 2021, calculated by applying exit terminal year price to book value (including AOCI) (“P/BV”) multiples ranging from 1.50x to 1.65x to the estimate of the book value (including AOCI) of the Company as of December 31, 2021, as reflected in the Forecasts. This analysis implied 2022 price to earnings (“P/E”) multiples ranging from 12.8x to 14.1x based on 2022 net operating income for the Company, calculated by applying, at the direction of the Company’s management, a 10% growth rate over the estimated 2021 net operating income for the Company reflected in the Forecasts (referred to as “2022 Net Operating Income”). Goldman Sachs derived the range of discount rates by application of the capital asset pricing model, which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally (referred to as the “CAPM”). The range of P/BV multiples used by Goldman Sachs was estimated by Goldman Sachs utilizing its professional judgment and experience including by taking into account current and historical observed P/BV multiples of the Company. Goldman Sachs then divided the ranges of illustrative equity values it derived for the Company by the total number of fully diluted shares of Company common stock outstanding as of June 30, 2018, as provided by the Company’s management, to derive a range of illustrative present values per share of Company common stock of $64.97 to $73.87.

For reference purposes only, Goldman Sachs performed the same discounted dividend analysis described above, using the same discount rates range of 8.9% to 10.0% but applying 1.14x, 1.25x and 1.34x exit terminal year P/BV multiples, reflecting the Company’s five-year, three-year and one-year average P/BV multiples, respectively

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(which analysis implied 2022 P/E multiples ranging from 9.7x to 11.4x, based on 2022 Net Operating Income for the Company). This analysis resulted in a range of illustrative present values per share of Company common stock of $49.59 to $60.16.

Illustrative Present Value of Future Stock Price Analysis

Goldman Sachs performed an illustrative analysis of the implied present value of the future value per share of Company common stock. Goldman Sachs derived a range of theoretical future values per share of Company common stock as of December 31, 2018 through December 31, 2021 by applying illustrative P/BV multiples ranging from 1.50x to 1.65x to the estimate of the book value (including AOCI) of the Company as of December 31 of each such year, as reflected in the Forecasts, and dividing the ranges of illustrative equity values it derived for the Company by the total number of fully diluted shares of Company common stock outstanding as of August 14, 2018, as provided by the Company’s management. The range of P/BV multiples used by Goldman Sachs was estimated by Goldman Sachs utilizing its professional judgment and experience including by taking into account current and historical observed P/BV multiples of the Company. By applying a discount rate of 9.7%, reflecting an estimate of the Company’s cost of equity, derived by application of the CAPM, Goldman Sachs discounted to present value as of June 30, 2018 both the range of theoretical future values per share it derived for the Company and the estimated dividends to be paid per share of Company common stock through the end of the applicable period as reflected in the Forecasts, to yield illustrative present values per share of Company common stock ranging from $62.72 to $72.02.

Selected Precedent Transactions Analysis

Goldman Sachs analyzed certain publicly available information relating to the selected acquisition transactions listed below announced since 2014 involving target companies in the property and casualty insurance industry.

Based on information in public filings, press releases and financial media reports relating to the applicable transaction, for each of the selected transactions, Goldman Sachs calculated and compared the consideration per share paid in the transaction as a multiple of:

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The results of these calculations for each transaction are set forth below:

While none of the selected transactions or companies that participated in the selected transactions are directly comparable to the merger or the Company, the selected transactions are all of the transactions announced since 2014 that, in Goldman Sachs’ professional judgment, involved target companies with operations that, for the purposes of analysis, may be considered similar to certain of the Company’s results, market size and services profile.

Based on the results of the foregoing calculations and Goldman Sachs’ analyses of the various transactions and its professional judgment, Goldman Sachs applied (a) a reference range of P/BV multiples of 1.33x (reflecting the 25^th percentile P/BV multiple referenced above) to 1.68x (reflecting the 75^th percentile P/BV multiple referenced above) to the Company’s BV per share (based on fully diluted shares) as of June 30, 2018 (including AOCI), as provided by the Company’s management, and (b) a reference range of Forward P/E multiples of 14.9x (reflecting the 25^th percentile Forward P/E multiple referenced above) to 18.1x (reflecting the 75^th percentile Forward P/E multiple referenced above) to the estimate of the Company’s net operating EPS for 2018 as reflected in the Forecasts, to derive ranges of implied values per share of Company common stock.

The results of these calculations are set forth below:

Premia Paid Analysis

Based on publicly available information, Goldman Sachs analyzed the premia paid in pending or completed all-cash North American transactions announced since 2013 in which the target company had an equity value based on the transaction consideration that was greater than $500 million. With respect to each of these transactions, Goldman Sachs reviewed the implied median premium of the price paid in the transaction to the closing stock price of the target company one trading day prior to announcement of the transaction.

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The following tables present the results of this review:

Based on its review of the implied premia for the selected transactions and its professional judgment and experience, Goldman Sachs applied a range of illustrative premia of 20.5% to 35.2% (reflecting the high-end and the low-end of the range of median premia referenced above) to the closing price per share of the Company as of August 17, 2018, to derive a range of implied values per share of Company common stock of $78.57 to $88.15.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to the Company or the merger.

Goldman Sachs prepared these analyses for purposes of providing its opinion to the Board as to the fairness from a financial point of view to the holders (other than Parent and its affiliates) of shares of Company common stock, as of the date of the opinion, of the $70.00 in cash per share to be paid to such holders pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon projections of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of the Company, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The merger consideration was determined through arm’s-length negotiations between the Company and Parent and was approved by the Board. Goldman Sachs provided advice to the Company during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to the Company or that any specific amount of consideration constituted the only appropriate consideration for the merger.

As described above, Goldman Sachs’ opinion was one of many factors taken into consideration by the Board in considering the merger. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the delivery of its fairness opinion to the Board and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B to this proxy statement.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for

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various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Parent, any of their respective affiliates and third parties, including affiliates of the founder of the Company, a significant stockholder of the Company, or any currency or commodity that may be involved in the merger. Goldman Sachs has acted as financial advisor to the Company in connection with, and has participated in certain of the negotiations leading to, the merger. Goldman Sachs expects to receive fees for its services in connection with the merger, all of which are contingent upon consummation of the merger, and the Company has agreed to reimburse certain of Goldman Sachs’ expenses arising, and to indemnify Goldman Sachs against certain liabilities that may arise, out of Goldman Sachs’ engagement. During the two-year period ended August 22, 2018, the Investment Banking Division of Goldman Sachs has not been engaged by the Company or its affiliates to provide financial advisory and/or underwriting services for which Goldman Sachs has received compensation. Goldman Sachs has provided certain financial advisory and/or underwriting services to Parent and/or its affiliates from time to time for which its Investment Banking Division has received, and may receive, compensation, including having acted as a senior co-manager with respect to a public offering of Parent’s 4.400% Senior Notes due May 2048 (aggregate principal amount $500,000,000) in March 2018 and as financial advisor to Parent in connection with the sale of its Talcott Resolution business in May 2018. During the two-year period ended August 22, 2018, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Parent and/or its affiliates of approximately $21,200,000. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to the Company, Parent, and affiliates of the founder of the Company, and their respective affiliates for which its Investment Banking Division may receive compensation.

The Company selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to an engagement letter between the Company and Goldman Sachs, the Company has agreed to pay Goldman Sachs for its services in connection with the merger an aggregate fee of approximately $14,500,000, all of which is payable contingent upon completion of the merger. In addition, the Company agreed to reimburse Goldman Sachs for certain of its expenses, including reasonable attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Opinion of Moelis & Company LLC

At a meeting of the Board held on August 21, 2018 to evaluate and approve the merger, Moelis delivered an oral opinion, which was confirmed by delivery of a written opinion, dated August 21, 2018, addressed to the Board to the effect that, as of the date of the opinion and based upon and subject to the conditions and limitations set forth in the opinion, the merger consideration to be received in the merger by holders of Company common stock (other than Excluded Holders) was fair, from a financial point of view, to such holders.

The full text of Moelis’ written opinion dated August 21, 2018, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C to this proxy statement and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the Board (solely in its capacity as such) in its evaluation of the merger. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the merger consideration and does not address the Company’s underlying business decision to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available to the Company. Moelis’ opinion does not constitute a recommendation as to how any holder of securities should vote or act with respect to the merger or any other matter. Moelis’ opinion was approved by a Moelis fairness opinion committee.

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In arriving at its opinion, Moelis, among other things:

In connection with its review, with the consent of the Board, Moelis relied on the information supplied to, discussed with or reviewed by it for purposes of its opinion being complete and accurate in all material respects. Moelis did not assume any responsibility for independent verification of any such information. With the consent of the Board, Moelis relied upon, without independent verification, the assessment of the Company and its legal, tax, regulatory and accounting advisors with respect to legal, tax, regulatory and accounting matters. With respect to the financial forecasts referred to above, Moelis assumed, at the direction of the Board, that such financial forecasts were reasonably prepared on a basis reflecting the best currently available estimates and judgments of Company management as to the future performance of the Company. Moelis expressed no views as to the reasonableness of any financial forecasts or the assumptions on which they are based. In addition, with the consent of the Board, Moelis did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet, or otherwise) of the Company nor was Moelis furnished with any such evaluation or appraisal.

Moelis’ opinion does not address the Company’s underlying business decision to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available with respect to the Company and does not address any legal, regulatory, tax or accounting matters. Moelis was not asked to, nor did it, offer any opinion as to any terms of the Agreements or any aspect or implication of the merger, except for the fairness of the merger consideration from a financial point of view to the holders of Company common stock (other than Excluded Holders). In rendering its opinion, Moelis assumed, with the consent of the Board, that the final executed form of the Agreements would not differ in any material respect from the drafts that Moelis reviewed, that the merger would be consummated in accordance with its terms without any waiver or modification that could be material to Moelis’ analysis, and that the parties to the Agreements would comply with all the material terms of the Agreements. Moelis assumed, with the consent of the Board, that all governmental, regulatory or other consents or approvals necessary for the completion of the merger will be obtained, except to the extent that could not be material to its analysis. Except as described in this summary, the Company and the Board imposed no other instructions or limitations on Moelis with respect to the investigations made or procedures followed by Moelis in rendering its opinion.

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Moelis’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis as of, the date of its opinion, and Moelis assumed no responsibility to update its opinion for developments after the date of its opinion.

Moelis’ opinion did not address the fairness of the merger or any aspect or implication of the merger to, or any other consideration of or relating to, the holders of any class of securities, creditors or other constituencies of the Company, other than the fairness of the merger consideration from a financial point of view to the holders of Company common stock (other than Excluded Holders). In addition, Moelis did not express any opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the merger, or any class of such persons, relative to the merger consideration or otherwise.

The following is a summary of the material financial analyses presented by Moelis to the Board at a meeting held on August 20, 2018, in connection with its opinion.

Some of the summaries of financial analyses below include information presented in tabular format. In order to fully understand Moelis’ analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis’ analyses.

Unless the context indicates otherwise, for purposes of, among other things, deriving per share implied equity values as more fully described below, Moelis calculated per share amounts for the Company based on diluted shares outstanding as of August 14, 2018, using the treasury stock method. All such information for the Company was provided by Company management.

Selected Publicly Traded Companies Analysis

Moelis reviewed financial and stock market information of selected U.S. publicly traded North American specialty property and casualty insurance companies with market capitalizations greater than $1 billion. Moelis excluded certain U.S. publicly traded North American specialty property and casualty insurance companies with market capitalization greater than $1 billion from its analysis as follows: (i) Markel Corporation (market capitalization approximately $17 billion) and Fairfax Financial Holdings Limited (market capitalization approximately $15 billion) were excluded because of their large size, (ii) Arch Capital Group Ltd. (market capitalization approximately $12 billion) was excluded because of its large size and its business mix (which included significant mortgage insurance), (iii) Amtrust Financial Services, Inc. (referred to as “AmTrust”) was excluded because of (a) its announced “take private” transaction, (b) its disclosed accounting issues, and (c) its significant stock price decline leading up to its announced “take private” transaction, and (iv) insurance companies that generated a majority of their premiums from either reinsurance or a single line of business (such as workers’ compensation insurance) were excluded. Moelis reviewed the equity value of each of the selected companies and the Company (calculated as market value of the relevant company’s diluted common equity based on its closing stock price on August 17, 2018), as a multiple of (A) actual book value, inclusive of AOCI (referred to as “P/BV”), as of June 30, 2018, (B) actual book value, inclusive of AOCI, less any intangible assets, including goodwill (referred to as “tangible book value”) (referred to as “P/TBV”), as of June 30, 2018, (C) estimated 2018 earnings per share (referred to as “P/2018E Earnings” or “2018E P/E”), and (D) estimated 2019 earnings per share (referred to as “P/2019E Earnings” or “2019E P/E”). Financial data for the selected companies was based on publicly available median consensus research analysts’ estimates and public filings. In the case of projected earnings for the Company, Moelis reviewed both (I) median consensus research analyst estimates, and (II) projections provided by the Company management.

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The results of this analysis are summarized in the following table:

In reviewing the characteristics of the selected publicly traded companies for purposes of determining reference ranges, Moelis noted that RLI and Kinsale were deemed not as relevant in light of their high profitability, RLI’s significant dividend payments in recent years and Kinsale’s high growth rate, all of which contributed to Moelis’ view that these factors contributed to their high P/BV trading multiples.

Based on the foregoing, Moelis selected reference range multiples of (i) 1.20x to 1.80x P/BV, (ii) 1.30x to 1.90x P/TBV, (iii) 13.0x to 21.0x P/2018E Earnings, and (iv) 12.0x to 19.0x P/2019E Earnings. Moelis then applied such multiple ranges to corresponding financial data for the Company and derived implied per share reference ranges from the resulting implied equity reference ranges, using the diluted share information described above. This analysis indicated the following implied per share reference ranges for the Company, as compared to the merger consideration:

In addition, Moelis noted that it viewed P/E multiples as less reliable as an indication of value in light of the inherent volatility of earnings for property and casualty insurance companies.

Selected Precedent Transactions Analysis

Moelis reviewed financial information of certain selected North American insurance transactions with transaction values greater than $1 billion announced since January 1, 2015 involving target companies with significant specialty property and casualty insurance businesses. Moelis excluded the AmTrust “take private” transaction because (i) such transaction was not a change of control transaction, (ii) AmTrust’s disclosed accounting issues and (iii) the significant stock price decline of AmTrust common stock leading up to the announced “take private” transaction. Moelis reviewed implied transaction values of the selected transactions as a multiple, to the extent information was publicly available, of (a) estimated earnings for the fiscal year ending immediately following the announcement of the relevant transaction (referred to as “P/FY+1 Earnings” or “FY+1 P/E”), (b) book value as of the most recent fiscal quarter for which public information was available immediately preceding announcement of the relevant transaction (referred to as “P/BV”) and (c) tangible book value as of the most recent fiscal quarter

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for which public information was available immediately preceding announcement of the relevant transaction (referred to as “P/TBV”). Financial data for the relevant transactions were based on public filings of the respective target companies. Implied transaction values were calculated based on the equity implied for the target companies using the implied purchase prices paid for the common equity of the target companies.

The results of this analysis are summarized in the following table:

In reviewing the characteristics of the selected precedent transactions for purposes of determining reference ranges, Moelis noted that (i) it focused on the selected transactions announced during the past two years and (ii) the Intact Financial Corporation acquisition of OneBeacon Insurance Group, Ltd. involved a target company of similar size and similar focus on specialty lines of insurance. Moelis also noted that certain of the data underlying the selected precedent transactions pre-dated the federal tax legislation enacted in December 2017.

Based on the foregoing and using its professional judgment, Moelis selected reference range multiples of (i) 1.30x to 1.70x P/BV, (ii) 1.40x to 1.90x P/TBV, and (iii) 15.0x to 20.0x P/FY+1 Earnings. Moelis then applied such multiple ranges to the corresponding financial data for the Company (using June 30, 2018 book value and tangible book value amounts, as well as estimated 2018 EPS) and derived implied per share reference ranges from the resulting implied equity reference ranges, using the diluted share information described above. This analysis indicated the following implied per share reference ranges for the Company, as compared to the merger consideration:

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In addition, Moelis noted that it viewed P/E multiples as less reliable as an indication of value in light of the inherent volatility of earnings for property and casualty insurance companies.

Dividend Discount Analysis

Moelis performed a dividend discount analysis of the Company, on a standalone basis, by calculating the estimated net present value as of June 30, 2018 of the projected dividends to be paid by the Company from June 30, 2018 through December 31, 2021, based on the projections of the Company management. This analysis did not take into account any excess capital that could be potentially distributed to holders of securities, either from excess capital available at June 30, 2018 (estimated by Company management to be approximately $180 million), or from cash flow generated in excess of projected dividends during the projection period, because (i) neither the selected publicly traded companies analysis referred to above nor the selected precedent transactions analysis referred to above was adjusted for excess capital (in light of the lack of available information), and (ii) the projections of the Company management did not provide any estimates of excess capital generation. Moelis performed this analysis using cost of equity rates ranging from 9.0% to 11.0%, based on an estimated cost of equity using the CAPM, inclusive of an equity size premium, and a terminal value at the end of the forecast period, using terminal P/BV multiples ranging from 1.30x to 1.60x, as applied to the projected book value of the Company as of December 31, 2021 (inclusive of AOCI). The terminal multiples for this analysis were selected based on a review of the current and historical P/BV multiples for the selected publicly traded companies referred to above and the P/BV multiples for the selected precedent transactions referred to above. This analysis indicated the following implied per share reference range for the Company, as compared to the merger consideration:

Other Information

Moelis further noted for the Board the following additional factors that were not considered part of Moelis’ financial analyses with respect to its opinion, but were referenced for informational purposes:

Miscellaneous

This summary of the analyses is not a complete description of Moelis’ opinion or the analyses underlying, and factors considered in connection with, Moelis’ opinion. The preparation of a fairness opinion is a complex analytical process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Moelis’ opinion. In arriving at its fairness determination, Moelis considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Moelis made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses.

No company or transaction used in the analyses described above is identical to the Company or the transaction. In addition, such analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which

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businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because the analyses described above are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, neither the Company, nor Moelis or any other person assumes responsibility if future results are materially different from those forecast.

The merger consideration was determined through arms’ length negotiations between the Company and Parent and was approved by the Board. Moelis did not recommend any specific consideration to the Company or the Board, or that any specific amount or type of consideration constituted the only appropriate consideration for the transaction.

Moelis acted as financial advisor to the Company in connection with the transaction and will receive a fee for its services, currently estimated to be approximately $4,842,000 in the aggregate, $2,000,000 of which became payable in connection with the delivery of its opinion, regardless of the conclusion reached therein, and the remainder of which is contingent upon completion of the transaction. Furthermore, the Company has agreed to indemnify Moelis for certain liabilities, including liabilities under the federal securities laws, arising out of its engagement.

Moelis’ affiliates, employees, officers and partners may at any time own securities (long or short) of the Company and Parent. In the future, Moelis may provide investment banking and other services to Parent and may receive compensation for such services.

Interests of Directors and Executive Officers in the Merger

Members of the Board and our executive officers have various interests in the merger described in this section that may be in addition to, or different from, the interests of the Company stockholders generally. You should keep this in mind when considering the recommendation of the Board for the adoption of the merger agreement. The members of the Board were aware of these interests and considered them at the time they approved the merger agreement and in making their recommendation that the Company stockholders adopt the merger agreement. These interests are described below.

Certain Assumptions

Except as otherwise specifically noted, for purposes of quantifying the potential payment and benefits described in this section, the following assumptions, as well as those described in the footnotes to the table titled “ —Golden Parachute Payments” below, were used:

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Treatment of Outstanding Equity Awards

The merger agreement provides that, as of immediately prior to or upon the effective time of the merger, awards that were granted under the Company stock plan and that are outstanding immediately prior to the effective time of the merger will be treated as follows, subject to applicable tax obligations and withholding:

Payments with respect to 2019 vesting company awards will be made as soon as administratively practicable after the effective time of the merger and not later than thirty days after the effective time of the merger. However, in the case of any equity award that is subject to Section 409A of the Code, payments will be made in accordance with and at the earliest time as is consistent with the requirements of Section 409A of the Code.

Treatment of Outstanding Equity Awards—Summary Tables

Non-Employee Directors

The following table sets forth the cash proceeds that each non-employee director of the Company would receive in respect of outstanding restricted stock awards held by such director as of the assumed effective time in accordance with the treatment of outstanding equity awards described above. As of the assumed effective time,

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the non-employee directors of the Company did not hold any other outstanding equity awards with respect to the Company. All share numbers have been rounded to the nearest whole number.

Executive Officers

The following table sets forth the cash proceeds that each of our executive officers would receive in respect of restricted stock unit awards and performance unit awards, as of the assumed effective time, including in respect of awards that may vest prior to the completion of the merger based upon the completion of continued service and/or the prior achievement of the applicable performance goals, in either case, independent of the occurrence of the merger. All unit numbers have been rounded to the nearest whole number.

As of immediately prior to the effective time of the merger, each restricted stock unit that constitutes a 2020 vesting company award will be cancelled and converted into the right to receive an amount in cash, without

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interest, equal to the product of (a) the merger consideration and (b) the number of restricted stock units in the applicable tranche, with the right to such cash subject to the same vesting and payment schedules as applicable to the 2020 vesting company award. The terms of the Company stock plan applicable to the 2020 vesting company awards provides for immediate vesting upon a qualifying termination of employment within one year following a change of control.

The amount reported represents the number of restricted stock units subject to the 2019 vesting company awards and 2020 vesting company awards, as applicable, multiplied by the merger consideration of $70.00 per share.

As of immediately prior to the effective time of the merger, each performance unit award that constitutes a 2020 vesting company award will be converted into the right to receive an amount in cash, without interest, equal to the product of (a) the merger consideration and (b) the target number of shares of Company common stock, with the right to such cash subject to the same vesting and payment schedules (other than performance-based vesting conditions) as applicable to the 2020 vesting company award. The terms of the Company stock plan applicable to such awards provides for immediate vesting of all outstanding performance unit awards upon a qualifying termination of employment within one year following a change of control.

The amount reported represents the target number of performance units subject to the 2019 vesting company awards and 2020 vesting company awards, as applicable, multiplied by the merger consideration of $70.00 per share.

Director Compensation

The Company expects to pay and/or issue to each non-employee director of the Company his or her full compensation for the 2018 calendar year, regardless of when the closing of the merger occurs. If the closing of the merger occurs on or prior to December 31, 2018, then the portion of the 2018 calendar year compensation normally provided in equity will instead be paid in cash; otherwise, such portion of the 2018 calendar year compensation will be issued in the form of an award of restricted shares. With respect to compensation for each non-employee director of the Company for the 2019 calendar year, the Company expects to pay to each non-employee director of the Company a cash amount, on a quarterly basis, equal to 1/4 of such director’s total annual compensation (historically paid partially in cash and partially in equity) for each quarter that commences prior to the closing of the merger.

President’s Award Agreements

The Company Board approved, on August 21, 2018, the granting of performance-based cash bonuses to certain named executive officers of the Company and certain other key employees (referred to as the “President’s Award recipients”) pursuant to a President’s Award Agreement (each referred to as a “President’s Award Agreement”) entered into between the Company and each President’s Award recipient. These performance-based cash bonuses are intended to secure the continued service and dedication to the Company of each President’s Award recipient whether or not the merger ultimately closes.

Pursuant to the President’s Award Agreements, each President’s Award recipient will be entitled to a lump-sum cash bonus (referred to as the “President’s Award”) of a specified minimum target vesting amount if: (i) the President’s Award recipient remains in continuous employment with the Company through June 30, 2022 (referred to as the “payment date”); (ii) the President’s Award recipient’s employment with the Company terminates prior to the payment date due to the President’s Award recipient’s death or “disability” (as defined in

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the President’s Award Agreement); (iii) the Company terminates the President’s Award recipient’s employment without “cause” after a “change in control” (each as defined in the President’s Award Agreement) but prior to the date that is one year after such change in control; or (iv) the President’s Award recipient resigns from employment with the Company for “good reason” (as defined in the President’s Award Agreement) after a change in control but prior to the date that is one year after such change in control. The minimum target vesting amount specified in each President’s Award Agreement is subject to upward adjustment based on satisfaction of specified performance goals during the 36-month period from January 1, 2019 through December 31, 2021 (or, if a change in control occurs between January 1, 2020 and December 31, 2021, from January 1, 2019 through the date of such change in control); provided that if a change in control occurs prior to January 1, 2020, the minimum target vesting amount will not be subject to any upward adjustment.

Except in the event of termination of employment due to the employee’s death or disability (in which case the President’s Award will be payable within 60 days after such death or disability), the President’s Award is payable as soon as administratively possible within 30 days after the payment date, provided that (i) in the event of a change in control prior to the payment date, the payment date will be one year from the date of the change in control and (ii) in the event of the President’s Award recipient’s termination of employment by the Company without cause or resignation by the President’s Award recipient for good reason between a change in control and the payment date, the President’s Award will be payable within 60 days following such termination of employment.

A President’s Award recipient will not be entitled to the cash bonus associated with the President’s Award Agreement if the President’s Award recipient’s employment with the Company terminates prior to the payment date for any reason other than due to the President’s Award recipient’s death, disability or, in each case within the one-year period following a change in control, a termination by the Company without cause or a resignation by the President’s Award recipient for good reason, or as otherwise determined by the Compensation Committee of the Company Board (referred to as the “Compensation Committee”).

For purposes of the President’s Award Agreements, “cause” is as defined in the President’s Award recipient’s employment agreement, or if no employment agreement exists or the employment agreement does not contain a definition of “cause,” is generally defined to include: (i) any act of dishonesty, willful misconduct, gross negligence, intentional or conscious abandonment or neglect of duty; (ii) commission of a criminal activity, fraud, embezzlement or any act of moral turpitude (including but not limited to violations of the Company’s sexual harassment or discrimination policies); (iii) a failure to reasonably cooperate in any investigation or proceeding concerning the Company; (iv) any unauthorized disclosure or use of confidential information or trade secrets; or (v) any violation of any restrictive covenant, such as a non-compete, non-solicit or non-disclosure agreement, between the President’s Award recipient and the Company or its affiliates.

For purposes of the President’s Award Agreements, “good reason” generally occurs if the Company, without the President Award recipient’s consent: (i) materially reduces the President’s Award recipient’s base compensation or short-term incentive target; (ii) changes the President’s Award recipient’s principal place of employment by more than 50 miles from its location immediately prior to the effective time of the merger; (iii) materially breaches an agreement under which the President’s Award recipient provides services to the Company; or (iv) fails to obtain an assumption of the President’s Award Agreement by any successor, in each case, subject to a 15-day notice period and a 30-day cure period.

Each President’s Award recipient is subject to non-solicitation and non-hiring obligations during, and for one-year following, a termination of employment, as well as confidentiality obligations under the terms of the President’s Award Agreements.

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The minimum target vesting amounts and maximum potential payouts under the President’s Awards granted to the Company’s named executive officers are as follows:

With respect to the President’s Awards granted to the Company’s seven other executive officers (excluding the named executive officers), the aggregate minimum target vesting amount is $3,114,184 and the aggregate maximum potential payout is $4,671,276.

Employment Arrangements

On August 21, 2018, the Compensation Committee and the Company Board approved the terms of an employment agreement with each of Stanley A. Galanski, President and Chief Executive Officer, and Ciro M. DeFalco, Executive Vice President and Chief Financial Officer (each, referred to as an “executive”), and the Company and Navigators Management Company, Inc. (referred to as “Navigators Management”), a New York corporation and wholly owned subsidiary of the Company, entered into an employment agreement (each, referred to as an “employment agreement”) with each executive on such date.

The employment agreement with Mr. Galanski superseded his existing employment agreement. Mr. DeFalco did not have an employment agreement with the Company or its subsidiaries prior to entering into the employment agreement described below.

The employment agreements each have an initial term expiring on December 31, 2019, and automatically continue for subsequent one-year periods (referred to as the “Term”), unless either party elects to terminate the employment agreement by written notice to the other party at least 120 days prior to the end of the Term as then in effect. Each employment agreement also provides that in the event of a “change in control” (as defined in the employment agreements), the Term will not terminate prior to the later of (i) the one-year anniversary of the change in control or (ii) the date that is 120 days after written notice is provided to the other party.

During the Term, Mr. Galanski will serve as President and Chief Executive Officer and Mr. DeFalco will serve as Executive Vice President and Chief Financial Officer.

The employment agreements provide for an annual base salary as of the effective date of the employment agreements of $1,000,000 and $575,000 for Mr. Galanski and Mr. DeFalco, respectively. The base salaries will be subject to annual review by the Compensation Committee each March in accordance with the Company’s regular practice, or otherwise as the Compensation Committee deems advisable, but will not be decreased to an amount less than the amount described above.

In addition, each executive is eligible for an annual performance bonus based upon the Company’s actual performance as compared to performance targets established by the Compensation Committee. Under the employment agreements, each executive’s initial annual performance bonus target amount is 100% of base salary, with a maximum annual performance bonus opportunity equal to 150% of his bonus target amount. The target and maximum bonus opportunities will be subject to periodic review by the Compensation Committee but will not be decreased to amounts less than the amounts described above.

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The employment agreements also entitle the executives to other benefits, such as equity and other long-term incentive awards that may be extended generally from time to time to senior officers of the Company and its subsidiaries, as approved by the Compensation Committee. As of the effective date of the employment agreements, Mr. Galanski’s annual long-term incentive compensation target amount is 200% of base salary and Mr. DeFalco’s annual long-term incentive compensation target amount is 100% of base salary. Mr. Galanski is also entitled to a monthly automobile expense allowance of $1,000.

Mr. DeFalco is also eligible for a cash retention award equal to $575,000, payable on January 1, 2020 (or as soon as administratively practicable thereafter), if he remains employed by Navigators Management through December 31, 2019, or if, during the 12-month period following a change in control, his employment is terminated by the Company or Navigators Management other than for “cause” or if he resigns for “good reason” (each as defined in Mr. DeFalco’s employment agreement).

Under the employment agreements, each executive will receive certain compensation in the event that his employment is terminated by the Company or Navigators Management for any reason other than for “cause,” or if the executive resigns for “good reason” (each as defined in the employment agreements, and referred to as a “qualifying termination”). If the executive’s employment is terminated by reason of a qualifying termination, provided the executive executes and does not revoke a general release of claims as specified in the employment agreement, the executive will be entitled to receive continued payment of his base salary for 12 months, an amount equal to 100% of his target annual bonus for the year in which the employment terminates (payable within 60 days after the qualifying termination), any annual bonus earned in the year prior to the year in which the employment terminates and that has not yet been paid and, for up to 18 months following the qualifying termination (or up to 12 months for Mr. DeFalco) monthly payment or reimbursement of a portion of the premiums (at active employee rates) for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), conditioned upon the executive’s timely election of coverage and payment of premiums. In addition, upon a qualifying termination that occurs during the 12-month period following a change in control, any outstanding stock grants will immediately vest, with outstanding performance-based awards vesting at 100% of the target level of performance, and for Mr. DeFalco, the cash retention award described above will be paid.

If an executive would otherwise be entitled to receive compensation from the Company or its affiliates in connection with a change in control of the Company or a termination of the executive’s employment that would be nondeductible under Section 280G of the Code, whether paid pursuant to an employment agreement or otherwise, those payments will be reduced in accordance with the employment agreement until no such payments are nondeductible under Section 280G of the Code, but only if the net after-tax benefit received by the executive after such reduction exceeds the net after-tax benefit received by the executive if no reduction was made.

For purposes of the employment agreements, “cause” is generally defined to include the executive’s: (i) commission of a felony; (ii) engagement in conduct involving fraud, moral turpitude, dishonesty, gross misconduct, embezzlement, or theft; (iii) failure to perform material duties assigned to him (subject to notice and a 30-day cure period); or (iv) material breach of the employment agreement or any Company policy (subject to notice and a 5-day cure period, to the extent the breach is curable).

For purposes of the employment agreements, “good reason” generally occurs if the Company or Navigators Management: (i) materially reduces or alters the rights, responsibilities, duties or authority of the executive, including demoting the executive to a lower-level position; (ii) materially reduces the executive’s base salary, annual performance bonus target or long-term incentive target; (iii) changes the executive’s principal location of work by more than 50 miles; (iv) requires the executive to take any action which would violate any federal, state or local criminal law; or (v) materially breaches the employment agreement, in each case, subject to a 15-day notice period and a 30-day cure period.

Each executive is subject to confidentiality, non-solicitation, and non-hiring obligations in the employment agreements. Mr. Galanski is also subject to non-competition obligations in his employment agreement.

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The Company is also party to a legacy employment agreement with Mr. Eisdorfer, which continues on a calendar year basis, unless either party elects to terminate the employment relationship by written notice to the other party by November 1 of the then-current term. Under the terms of this employment agreement, in the event that Mr. Eisdorfer’s employment is terminated by the Company for any reason other than for “cause” (as defined in the employment agreement) or if he resigns during the 12-month period following (i) a “change of control” of Navigators Management (as defined in the employment agreement) or (ii) a “change of [Mr. Eisdorfer’s] duties” (as defined in the employment agreement), Mr. Eisdorfer will be entitled to receive, subject to offset for base salary and medical benefits received from a subsequent employer, an amount equal to two times his annual base salary and, for up to 6 months following the termination, monthly payment of the premiums for medical continuation coverage under COBRA.

New Severance Plan

Prior to the closing of the merger, as contemplated by the merger agreement, the Company expects to adopt a severance plan that will generally cover all full-time employees of the Company primarily employed in the United States who are not party to an individualized employment or other similar written agreement with the Company that provides for severance (or similar) pay (such plan is referred to as the “severance plan”). Each executive officer of the Company, excluding Mr. Galanski, Mr. DeFalco, Mr. Sprott, Mr. Bach and Mr. Eisdorfer, will be eligible for benefits under the severance plan.

If an eligible employee’s employment is terminated by reason of a qualifying termination (i.e., generally an involuntary termination without cause by the Company), provided the eligible employee executes and does not revoke a general release of claims, the employee will be entitled to receive a lump-sum payment as soon as practicable following the qualifying termination in an amount equal to the employee’s weekly base pay (i.e., the employee’s annual salary divided by 52 weeks) multiplied by the number of weeks determined based on the schedule set forth in the plan (the “severance period”). For executive officers of the Company, the severance period will be equal to 2 weeks per year of service, subject to a 26-week minimum and a 52-week maximum number of weeks. Under the expected terms of the severance plan and the terms of Mr. Eisdorfer’s employment agreement, assuming the eligible executive officers and Mr. Eisdorfer were terminated as of the assumed effective time, the eligible executive officers and Mr. Eisdorfer would be entitled to severance in an aggregate amount of $2,472,823.

Golden Parachute Compensation

In accordance with Item 402(t) of Regulation S-K, the tables below present the estimated amounts of compensation that each named executive officer could receive that are based on or otherwise relate to the merger. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section we use such term to describe the merger-related compensation payable to the Company’s named executive officers. This merger-related compensation is subject to a non-binding advisory vote of the Company stockholders, as set forth in proposal 2 to this proxy statement. For additional information, see the section entitled “Proposal 2: Non-Binding Compensation Advisory Proposal,” beginning on page 28.

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The amounts set forth below are estimates of amounts that would be payable to the named executive officers using the assumptions above described under “—Certain Assumptions.” These estimates are based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement. Some of the assumptions are based on information not currently available, and as a result, the actual amounts, if any, to be received by a named executive officer may differ in material respects from the amounts set forth below. All dollar amounts set forth below have been rounded to the nearest whole number.

These cash severance payments are considered double-trigger payments because they will only be paid or, in the case of Mr. DeFalco’s retention award, accelerated, in connection with a qualifying termination of employment. These cash severance amounts received are not enhanced by the transaction and are payable on a qualifying termination of employment without regard to the transaction, provided that the cash retention award is only payable at the time of such qualifying termination if the qualifying termination of employment occurs within 12 months following the transaction. For a discussion of the terms of each of Mr. Galanski’s and Mr. DeFalco’s employment agreements, please see “—Employment Arrangements” above.

For Mr. Bassett, Mr. Casella and Mr. Tizzio, the cash amounts reflect the sum of the following:

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Cash payments made pursuant to the President’s Award Agreements would be made on a qualifying termination of employment or in the event of continued employment, as described in more detail above. Cash severance payments pursuant to the terms of the proposed severance plan would be considered double-trigger payments because they will only be paid in connection with a qualifying termination of employment. These cash amounts received are not enhanced by the transaction and are payable on a qualifying termination of employment without regard to the transaction.

Details of the cash amounts are shown in the following supplementary table:

The equity amounts are summarized in the following table, with the performance units reflected at target pursuant to the terms of the merger agreement:

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Director and Officer Indemnification and Insurance

The merger agreement provides that, from and after the effective time of the merger, the surviving company in the merger will, and Parent will cause such surviving company to, indemnify and hold harmless the present and former directors and officers of the Company or any of its subsidiaries with respect to all claims, liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in settlement or compromise) and expenses (including fees and expenses of legal counsel) in connection with any action based on or arising out of, in whole or in part, (i) the fact that such person was a director or officer of the Company or such subsidiary or (ii) acts or omissions by such person in such person’s capacity as a director, officer, employee or agent of the Company or such subsidiary or taken at the request of the Company or such subsidiary, in each case, at, or at any time prior to, the effective time of the merger (including any action relating in whole or in part to the transactions contemplated by the merger agreement or relating to the enforcement of the indemnification provisions in the merger agreement, as described in this paragraph), to the fullest extent permitted under applicable law.

The merger agreement also provides that “tail” directors’ and officers’ liability insurance policies covering acts or omissions occurring prior to the closing of the merger with respect to individuals covered by the directors’ and officers’ liability insurance policy of the Company and its subsidiaries prior to the closing of the merger, on terms and in amount no less favorable than those of the Company’s current policies, will be obtained and will cover a period of six years following the closing. However, Parent is not required to obtain any policy with an annual premium exceeding 300% of the current annual premium.

For additional information, see the section entitled “The Agreement and Plan of Merger—Indemnification; Directors’ and Officers’ Insurance,” beginning on page 96.

Certain Effects of the Merger

If the proposal to adopt the merger agreement is approved by the holders of shares of Company common stock representing a majority of the outstanding shares of Company common stock entitled to vote on such matter and the other conditions to the closing of the merger are either satisfied or (to the extent permitted by applicable law)

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waived, Merger Sub will be merged with and into the Company upon the terms set forth in the merger agreement. As the surviving corporation in the merger, the Company will continue to exist following the merger as a wholly owned subsidiary of Parent.

Following the merger, all of the Company’s equity interests will be beneficially owned by Parent, and none of the Company’s current stockholders will, by virtue of the merger, have any ownership interest in, or be a stockholder of, the Company, the surviving corporation or Parent after the completion of the merger. As a result, the Company’s current stockholders will no longer benefit from any increase in the value, nor will they bear the risk of any decrease in the value, of Company common stock. Following the merger, Parent will benefit from any increase in the Company’s value and also will bear the risk of any decrease in the Company’s value.

Upon completion of the merger, each share of Company common stock issued and outstanding immediately prior to the effective time of the merger (other than (i) shares owned by the Company, Parent, Merger Sub or any of their respective wholly owned subsidiaries and (ii) shares held by stockholders who have not voted in favor of the merger and who shall have properly and validly perfected their statutory rights of appraisal in respect of such shares in accordance with Section 262 of the DGCL) will be cancelled and automatically converted into the right to receive the merger consideration, without interest, subject to any applicable withholding taxes. For additional information, see the section entitled “The Agreement and Plan of Merger—Effects of the Merger,” beginning on page 82.

For information regarding the effects of the merger on the Company’s outstanding equity awards, please see the sections entitled “—Interests of Directors and Executive Officers in the Merger,” beginning on page 64, and “The Agreement and Plan of Merger—Treatment of Company Equity Awards,” beginning on page 83.

Company common stock is currently registered under the Exchange Act and trades on NASDAQ under the symbol “NAVG.” Following the completion of the merger, shares of Company common stock will no longer be traded on NASDAQ or any other public market. In addition, the registration of shares of Company common stock under the Exchange Act will be terminated, and the Company will no longer be required to file periodic and other reports with the SEC with respect to Company common stock. Termination of registration of Company common stock under the Exchange Act will reduce the information required to be furnished by the Company to the Company stockholders and the SEC, and would make certain provisions of the Exchange Act, such as the requirement to file annual and quarterly reports pursuant to Section 13(a) or 15(d) of the Exchange Act, the short-swing trading provisions of Section 16(b) of the Exchange Act and the requirement to furnish a proxy statement in connection with stockholders’ meetings pursuant to Section 14(a) of the Exchange Act, no longer applicable to the Company to the extent that they apply solely as a result of the registration of Company common stock under the Exchange Act.

Consequences if the Merger is Not Completed

If the proposal to adopt the merger agreement is not approved by the holders of a majority of the outstanding shares of Company common stock entitled to vote on such matter or if the merger is not completed for any other reason, you will not receive any consideration from Parent or Merger Sub for your shares of Company common stock. Instead, the Company will remain a public company, and Company common stock will continue to be listed and traded on NASDAQ. We expect that our management will operate our business in a manner similar to that in which it is being operated today and that holders of shares of Company common stock will continue to be subject to the same risks and opportunities as they currently are subject to with respect to their ownership of Company common stock. If the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of Company common stock, including the risk that the market price of Company common stock may decline to the extent that the current market price of Company common stock reflects a market assumption that the merger will be completed. If the proposal to adopt the merger agreement is not approved by the holders of a majority of the outstanding shares of Company common stock entitled to vote on such matter or if the merger is not completed for any other reason, there can be no assurance that any other

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transaction acceptable to us will be offered or that our business, prospects or results of operations will not be adversely impacted.

In addition, upon termination of the merger agreement under certain circumstances, the Company would be obligated to pay Parent a termination fee of $68.25 million, or would have been obligated to pay Parent a reduced termination fee of $42 million, and could also be required to reimburse Parent for all of its reasonable and documented out-of-pocket expenses incurred in connection with the merger in an amount not to exceed $7 million. For additional information, see the section entitled “The Agreement and Plan of Merger—Expenses; Termination Fees,” beginning on page 103.

Financing of the Merger

The completion of the merger is not conditioned upon Parent’s receipt of financing.

Parent has sufficient cash and short-term investments on hand to fund the aggregate merger consideration. However, we anticipate that Parent will consider alternative sources of capital, and we believe that Parent intends to take dividends from its insurance company subsidiaries to replenish its holding company liquidity, which we believe will require state regulatory approval. We believe that Parent does not intend to issue common equity in connection with the merger.

Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of the material U.S. federal income tax consequences to U.S. holders and non-U.S. holders (in each case, as defined below) of the receipt of the merger consideration in exchange for shares of Company common stock pursuant to the merger. This discussion is based upon the Internal Revenue Code of 1986, as amended (referred to as the “Code”), the U.S. Treasury regulations promulgated thereunder, and judicial and administrative authorities, rulings and decisions, all as in effect as of the date of this proxy statement. These authorities may change, possibly with retroactive effect, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any state, local or non-U.S. tax consequences, the Medicare tax on net investment income (under Section 1411 of the Code) or any U.S. federal tax consequences other than those pertaining to the U.S. federal income tax. This discussion is not binding on the Internal Revenue Service (referred to as the “IRS”), or the courts and, therefore, could be subject to challenge, which could be sustained.

This discussion applies only to holders (as defined below) that hold shares of Company common stock as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that might be relevant to holders in light of their particular circumstances and does not apply to holders subject to special treatment under the U.S. federal income tax laws (such as, but not limited to, dealers or brokers in securities, commodities or non-U.S. currencies, traders in securities that elect to apply a mark-to-market method of accounting, banks and certain other financial institutions, insurance companies, mutual funds, tax-exempt organizations, holders liable for the alternative minimum tax, partnerships, S corporations or other pass-through entities or investors in partnerships, regulated investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, former citizens or residents of the United States, U.S. expatriates, non-U.S. governments and their controlled entities, U.S. holders whose functional currency is not the U.S. dollar, holders who hold shares of Company common stock as part of a hedge, straddle, constructive sale or conversion transaction or other integrated investment, or holders who acquired shares of Company common stock pursuant to the exercise of employee stock options, through a tax qualified retirement plan or otherwise as compensation).

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of Company common stock, the tax treatment of a partner in such partnership will depend on the status of the partner and the activities of the partnership. Any such entity should consult its own tax advisor regarding the tax consequences of the receipt of the merger consideration in exchange for shares of Company common stock pursuant to the merger.

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Holders of shares of Company common stock should consult their tax advisors as to the specific tax consequences to them of the receipt of the merger consideration in exchange for shares of Company common stock pursuant to the merger including the applicability and effect of the alternative minimum tax and any state, local, non-U.S. and other tax laws, in light of their particular circumstances.

Tax Consequences to U.S. Holders

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of shares of Company common stock that is:

The receipt of the merger consideration by U.S. holders in exchange for shares of Company common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder who receives the merger consideration in exchange for shares of Company common stock pursuant to the merger will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between (A) the amount of any cash received and (B) the U.S. holder’s adjusted tax basis in such shares of Company common stock. Gain or loss must be determined separately for each block of shares of Company common stock (i.e., shares acquired for the same cost in a single transaction) disposed of pursuant to the merger. Such gain or loss generally will be capital gain or loss and generally will be long-term capital gain or loss if the U.S. holder’s holding period for such shares of Company common stock is more than one year as of the date of the merger. Long-term capital gains of certain non-corporate U.S. holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding for U.S. holders

The receipt of the merger consideration by U.S. holders in exchange for shares of Company common stock pursuant to the merger may be subject to information reporting and backup withholding. To avoid backup withholding, a U.S. holder should timely complete and return IRS Form W-9, certifying that such U.S. holder is a “United States person” as defined under the Code, the taxpayer identification number provided is correct and such U.S. holder is not subject to backup withholding. Certain types of U.S. holders (including, with respect to certain types of payments, corporations) generally are not subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a holder’s U.S. federal income tax liability if the required information is furnished by such holder on a timely basis to the IRS.

Tax Consequences to Non-U.S. Holders

For purposes of this discussion, the term “non-U.S. holder” means a beneficial owner of shares of Company common stock that is not a U.S. holder and is not an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

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The receipt of the merger consideration by non-U.S. holders in exchange for shares of Company common stock pursuant to the merger generally will not be subject to U.S. federal income tax unless:

Regulatory Approvals Required for the Merger

Completion of the merger is conditioned on the expiration or termination of any applicable waiting period (and any extension thereof) applicable to the completion of the merger under the HSR Act. The Company and Parent filed their respective notification and report forms under the HSR Act with the Antitrust Division and the FTC as of September 18, 2018, which triggered the start of the HSR Act waiting period. Unless the Company or Parent voluntarily withdraws its notification and report form or the Antitrust Division or FTC formally requests additional information concerning the merger, the waiting period will expire at 11:59 p.m. Eastern Time on October 18, 2018.

At any time before or after the effective time of the merger, the Antitrust Division, the FTC, antitrust authorities outside the United States or U.S. state attorneys general could take action under applicable antitrust laws, including seeking to enjoin the completion of the merger, conditionally approving the merger upon the divestiture of the Company’s or Parent’s assets, subjecting the completion of the merger to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.

The respective obligations of the parties under the merger agreement to effect the merger are also conditioned on the applicable parties making declarations, notifications or filings with the following governmental authorities and/or obtaining the following consents:

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