RICHMOND, Va., Jan. 31,
2024 /CNW/ -- Markel Group Inc. (NYSE: MKL)
today reported its financial results for the year ended
December 31, 2023.
"We enjoyed excellent returns in 2023 from Markel Ventures, our
investment operations, and many portions of our insurance
business," said Thomas S. Gayner,
Chief Executive Officer. "While we remain focused on some areas of
improvement for our insurance operations, our three-engine system
continues to drive profitable growth. Strong operating cash flows
from each of our insurance, investments, and Markel Ventures
engines can now be reinvested to continue growing shareholder
value."
This table presents summary financial data for 2023 and 2022.
Generally accepted accounting principles (GAAP) require that we
include unrealized gains and losses on equity securities in net
income. Given the magnitude of our equity portfolio, we believe
that this approach creates volatility in revenues and net income
that can obscure the operating performance of our businesses and
does not align with our long-term investment philosophy. As of
December 31, 2023, the fair value of our equity portfolio
included cumulative unrealized gains of $6.1
billion.
|
Years Ended December
31,
|
(in thousands,
except per share amounts)
|
2023
|
|
2022
|
Earned
premiums
|
$
8,295,479
|
|
$
7,587,792
|
Markel Ventures
operating revenues
|
$
4,985,081
|
|
$
4,757,527
|
Net investment
income
|
$
734,532
|
|
$
446,755
|
Net investment gains
(losses)
|
$
1,524,054
|
|
$
(1,595,733)
|
Comprehensive income
(loss) to shareholders
|
$
2,285,344
|
|
$
(1,205,779)
|
Diluted net income
(loss) per common share
|
$
146.98
|
|
$
(23.72)
|
Combined
ratio
|
98 %
|
|
92 %
|
Highlights of our 2023 results include:
- Earned premiums grew 9% in 2023, reflecting growth in gross
premium volume in recent periods.
- The higher combined ratio in 2023 compared to 2022 was
primarily attributable to a higher attritional loss ratio.
- Operating income from Markel Ventures increased 35%, primarily
driven by higher operating margins at our products businesses.
- Net investment income increased 64% in 2023 due to higher
yields across our fixed maturity securities, short-term investments
and cash equivalents and an increase in our allocation of cash to
money market funds.
- Net investment gains in 2023 reflect an increase in the fair
market value of our equity portfolio resulting from favorable
market value movements.
We believe our financial performance is most meaningfully
measured over longer periods of time, which tends to mitigate the
effects of short-term volatility and also aligns with the long-term
perspective we apply to operating our businesses and making
investment decisions. We generally use five-year periods to measure
our performance. Over the five-year period ended December 31,
2023, our share price increased at a compound annual rate of
6%.
The compound annual growth in book value per common share
over the five-year period ended December 31, 2023 was 11%. We
give consideration to the following information when assessing this
measure:
- Amortization expense - As we grow through acquisitions, our
intangible assets grow. GAAP requires that we amortize a portion of
these acquired intangible assets, which is a non-cash charge to net
income. Amortization of acquired intangible assets for the
five-year period ended December 31,
2023 totaled $827.9
million.
- Unrealized gains and losses on fixed maturity securities - We
invest in high credit quality, investment grade securities, with
durations that are generally matched to the expected timing of
claims-related payments. As such, unrealized gains and losses from
our bond portfolio are generally expected to reverse as the
securities mature. The fair value of our bond portfolio included
cumulative pre-tax unrealized losses of $559.6 million as of December 31, 2023 compared to cumulative pre-tax
unrealized gains of $92.4 million as
of December 31, 2018.
- Value of our businesses - Book value does not include changes
in the fair value of our acquired businesses or equity method
investments, other than decreases arising from an impairment.
Acquired businesses include our Markel Ventures, insurance-linked
securities and program services businesses.
Insurance Results
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
|
% Change
|
Operating
revenues:
|
|
|
|
|
|
Insurance
segment
|
$
7,282,705
|
|
$ 6,528,263
|
|
12 %
|
Reinsurance
segment
|
1,014,294
|
|
1,063,347
|
|
(5) %
|
Program services,
insurance-linked securities and other insurance
|
280,131
|
|
493,746
|
|
(43) %
|
Insurance
operations
|
$
8,577,130
|
|
$ 8,085,356
|
|
6 %
|
Consolidated Underwriting Results
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
|
% Change
|
Gross premium
volume
|
$
10,276,419
|
|
$
9,843,555
|
|
4 %
|
Net written
premiums
|
$
8,397,575
|
|
$
8,203,390
|
|
2 %
|
Earned
premiums
|
$
8,295,479
|
|
$
7,587,792
|
|
9 %
|
Underwriting
profit
|
$
132,736
|
|
$
626,620
|
|
(79) %
|
|
|
|
|
|
|
Underwriting Ratios
(1)
|
|
|
|
|
Point Change
|
Loss ratio
|
|
|
|
|
|
Current accident year
loss ratio
|
64.6 %
|
|
60.8 %
|
|
3.8
|
Prior accident years
loss ratio
|
(0.5) %
|
|
(2.2) %
|
|
1.7
|
Loss ratio
|
64.2 %
|
|
58.6 %
|
|
5.6
|
Expense
ratio
|
34.2 %
|
|
33.2 %
|
|
1.0
|
Combined
ratio
|
98.4 %
|
|
91.7 %
|
|
6.7
|
|
|
|
|
|
|
Current accident year
loss ratio event impact (2)
|
0.5 %
|
|
1.1 %
|
|
(0.6)
|
|
|
|
|
|
|
Current accident year
loss ratio, excluding impact of events (3)
|
64.1 %
|
|
59.7 %
|
|
4.4
|
Combined ratio,
excluding current year impact of events (3)
|
97.9 %
|
|
90.7 %
|
|
7.2
|
|
|
(1)
|
Amounts may not
reconcile due to rounding.
|
(2)
|
Event impact represents
the impact of catastrophes in 2023 and 2022, as well as the
Russia-Ukraine conflict in 2022. The point impact is calculated as
the associated net losses and loss adjustment expenses divided by
total earned premiums.
|
(3)
|
See Supplemental
Financial Information for additional information regarding these
non-GAAP financial measures.
|
In 2023, underwriting results included $40.1 million of net losses and loss adjustment
expenses attributed to the Hawaiian wildfires and Hurricane Idalia
(2023 Catastrophes). In 2022, underwriting results included
$81.9 million of net losses and loss
adjustment expenses attributed to Hurricane Ian and the
Russia-Ukraine conflict. Excluding these losses, the
increase in our consolidated combined ratio in 2023 compared to
2022 was primarily driven by a higher attritional loss ratio across
both our underwriting segments.
Insurance Segment
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
|
% Change
|
Gross premium
volume
|
$
9,217,150
|
|
$
8,606,700
|
|
7 %
|
Net written
premiums
|
$
7,432,062
|
|
$
7,040,176
|
|
6 %
|
Earned
premiums
|
$
7,282,705
|
|
$
6,528,263
|
|
12 %
|
Underwriting
profit
|
$ 162,176
|
|
$
549,871
|
|
(71) %
|
|
|
|
|
|
|
Underwriting Ratios
(1)
|
|
|
|
|
Point Change
|
Loss ratio
|
|
|
|
|
|
Current accident year
loss ratio
|
64.4 %
|
|
60.3 %
|
|
4.1
|
Prior accident years
loss ratio
|
(1.4) %
|
|
(2.2) %
|
|
0.8
|
Loss ratio
|
63.0 %
|
|
58.1 %
|
|
4.9
|
Expense
ratio
|
34.8 %
|
|
33.5 %
|
|
1.3
|
Combined
ratio
|
97.8 %
|
|
91.6 %
|
|
6.2
|
|
|
|
|
|
|
Current accident year
loss ratio event impact (2)
|
0.5 %
|
|
1.1 %
|
|
(0.6)
|
|
|
|
|
|
|
Current accident year
loss ratio, excluding impact of events (3)
|
63.9 %
|
|
59.2 %
|
|
4.7
|
Combined ratio,
excluding current year impact of events (3)
|
97.2 %
|
|
90.5 %
|
|
6.7
|
|
|
(1)
|
Amounts may not
reconcile due to rounding.
|
(2)
|
Event impact represents
the impact of catastrophes in 2023 and 2022, as well as the
Russia-Ukraine conflict in 2022. The point impact is calculated as
the associated net losses and loss adjustment expenses divided by
total earned premiums.
|
(3)
|
See Supplemental
Financial Information for additional information regarding these
non-GAAP financial measures.
|
Premiums
The increase in gross premium volume in our Insurance segment in
2023 was driven by more favorable rates and new business growth
across many of our product lines, most notably within our personal
lines and property product lines. The increase was partially offset
by lower premium volume within select lines of our professional
liability and general liability product lines, where we are
adjusting our writings in response to changes in market conditions
and downward pressure on rates. We continue to focus on rate
adequacy, particularly within certain classes of our casualty and
professional liability product lines, and will not write business
that we believe will not meet our underwriting profit
targets. Net retention of gross premium volume was 81% in 2023
compared to 82% in 2022. The decrease was driven by higher cession
rates on our personal lines product lines in 2023 compared to 2022.
The increase in earned premiums in 2023 was primarily due to higher
gross premium volume across most product lines in recent
periods.
Combined Ratio
The Insurance segment's current accident year losses and loss
adjustment expenses in 2023 included $39.6
million of net losses and loss adjustment expenses
attributed to the 2023 Catastrophes. Current accident year losses
in 2022 included $69.2 million of net
losses and loss adjustment expenses attributed to Hurricane Ian and
the Russia-Ukraine conflict. Excluding these losses, the
increase in the current accident year loss ratio in 2023 compared
to 2022 was primarily attributable to higher attritional loss
ratios within our general liability and professional liability
product lines in 2023 compared to 2022. Based on the adverse prior
accident year loss development trends on these long-tail lines of
business and the uncertainty around future loss cost trends, as
discussed in further detail below, we increased our attritional
loss ratios on certain product classes within our general liability
and professional liability product lines in 2023. Consistent with
our loss reserving philosophy and to increase the likelihood that
the reserves established for our in-force portfolio will ultimately
prove to be adequate, we are taking a more cautious approach in our
reserving, resulting in higher attritional loss ratios on this
business.
Additionally, we recognized losses on our intellectual property
collateral protection insurance written within our professional
liability product line in 2023 due to higher than anticipated
levels of claims and loss experience. Losses on this product line
included $65.0 million of credit
losses recognized in connection with fraudulent letters of credit
that were provided by an affiliate of Vesttoo Ltd. as collateral
for reinsurance purchased on two policies, which we believe
represents our full exposure to credit losses on the related
reinsurance recoverables. We are actively pursuing remedies to make
recoveries on the reinsurance recoverables impacted by the
fraudulent letters of credit and do not have any other ceded
reinsurance contracts with Vesttoo Ltd. or its affiliates.
The Insurance segment's 2023 combined ratio included
$104.7 million of favorable
development on prior accident years loss reserves, which was
primarily attributable to favorable development on our property,
marine and energy, professional liability, personal lines and
workers' compensation product lines, partially offset by adverse
development on our general liability product lines.
Net favorable development in 2023 was net of $330.7 million, or five points, of adverse
development on prior accident years on the U.S.-based risks within
our general liability and professional liability product lines in
2023. This adverse development was most substantial on our primary
casualty contractors' liability and excess and umbrella general
liability product lines. Our professional liability product lines
experienced net favorable prior accident year development in 2023
with favorable development on our international business being
partially offset by adverse development on business with U.S.-based
risks. Beginning in the latter half of 2022, select lines within
our U.S.-based general liability and professional liability
portfolio have been impacted by consecutive quarters of increased
frequency of large claims and unfavorable loss cost trends,
resulting in consecutive periods of adverse development, primarily
on the 2016 to 2019 accident years. The impact of economic and
social inflation, including the rising cost to adjust and settle
claims and the impact of more pervasive litigation financing
trends, has contributed to the loss cost trends leading to these
higher than anticipated losses in older accident years for these
product lines over the past several quarters.
In response to consecutive quarters of adverse development, in
the fourth quarter of 2023, we conducted an extensive reserve study
on selected general liability and professional liability product
lines, which resulted in further increases to our prior accident
year loss reserves in the fourth quarter of 2023. A significant
portion of our casualty portfolio is associated with construction
business, which has grown meaningfully in recent years. Our study
determined that the ultimate claim reporting tail on certain of our
casualty construction lines are likely to be longer than we
initially anticipated. Within our excess and umbrella general
liability and risk-managed errors and omissions professional
liability books, we determined that there was a greater than
expected propensity for limits below our attachment point to erode,
pushing more claims into our layers. Further, reporting of these
claims has lagged historical loss development patterns due to the
effect of court closures and claims backlogs arising from the
COVID-19 pandemic, in addition to aggressive tactics by the
plaintiffs' bar and delayed claims reporting trends. Although we
have achieved significant rate increases since 2019 on many of
these lines in response to heightened loss trends, the findings of
our study led us to increase our loss development factors and
therefore our estimate of the ultimate loss ratios on our primary
casualty contractors' liability, excess and umbrella general
liability and risk-managed errors and omissions professional
liability product lines. This resulted in significant strengthening
of reserves on the impacted lines, including on the 2020 to 2022
accident years, where we determined that the incurred loss trends
are following a similar loss development trend at the same stage as
older accident years. Consistent with our reserving philosophy to
hold reserves that are more likely to be redundant than deficient,
we increased reserves in areas where there were indications that
our reserves may have been deficient, however, in instances where
claims trends have been more favorable than we previously
anticipated, we will wait to reduce loss reserves until those
trends are observed over additional periods of time. For those
lines in which we strengthened reserves, although we believe the
gross and net reserves are adequate based on information available
at this time, we continue to closely monitor reported claims, claim
settlements, ceded reinsurance contract attachments and judicial
decisions, among other things, and may adjust our estimates as new
information becomes available.
The increase in the Insurance segment's expense ratio in 2023
was primarily due to higher personnel costs, professional fees and
other general and administrative expenses, which were partially
offset by the impact of higher earned premiums.
Reinsurance Segment
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
|
% Change
|
Gross premium
volume
|
$
1,046,539
|
|
$
1,229,851
|
|
(15) %
|
Net written
premiums
|
$ 967,799
|
|
$
1,167,312
|
|
(17) %
|
Earned
premiums
|
$
1,014,294
|
|
$
1,063,347
|
|
(5) %
|
Underwriting profit
(loss)
|
$
(19,265)
|
|
$
83,859
|
|
NM
(1)
|
|
|
|
|
|
|
Underwriting Ratios
(2)
|
|
|
|
|
Point Change
|
Loss ratio
|
|
|
|
|
|
Current accident year
loss ratio
|
66.0 %
|
|
63.6 %
|
|
2.4
|
Prior accident years
loss ratio
|
5.6 %
|
|
(2.4) %
|
|
8.0
|
Loss ratio
|
71.7 %
|
|
61.2 %
|
|
10.5
|
Expense
ratio
|
30.2 %
|
|
30.9 %
|
|
(0.7)
|
Combined
ratio
|
101.9 %
|
|
92.1 %
|
|
9.8
|
|
|
|
|
|
|
Current accident year
loss ratio Russia-Ukraine conflict impact (3)
|
— %
|
|
1.2 %
|
|
(1.2)
|
|
|
|
|
|
|
Current accident year
loss ratio, excluding Russia-Ukraine conflict impact
(4)
|
66.0 %
|
|
62.4 %
|
|
3.6
|
Combined ratio,
excluding current year Russia-Ukraine conflict impact
(4)
|
101.9 %
|
|
90.9 %
|
|
11.0
|
|
|
(1)
|
NM - Ratio not
meaningful.
|
(2)
|
Amounts may not
reconcile due to rounding.
|
(3)
|
The point impact of the
Russia-Ukraine conflict is calculated as the associated net losses
and loss adjustment expenses divided by total earned
premiums
|
(4)
|
See Supplemental
Financial Information for additional information regarding these
non-GAAP financial measures.
|
Premiums
The decrease in gross premium volume in our Reinsurance segment
in 2023 was driven by significantly lower gross premiums within our
professional liability product lines, primarily attributable to
unfavorable premium adjustments in 2023 compared to favorable
premium adjustments in 2022, largely driven by transaction
liability business, due to lower volume of deal activity, and the
deterioration in the pricing environment on directors and officers
liability. Lower premium volume within professional liability also
reflects decreases on renewals, due to decreased exposures and
participation. The decrease in professional liability premium
volume was partially offset by higher gross premiums within our
marine and energy product lines due to increases on renewals,
arising from increased exposures and more favorable rates, as well
as new business. Significant variability in gross premium
volume can be expected in our Reinsurance segment due to
individually significant contracts and multi-year contracts.
Net retention of gross premium volume was 92% in 2023
compared to 95% in 2022. The decrease in net retention was driven
by changes in mix of gross premium volume, as our professional
liability business is fully retained and our marine and energy
business carries a higher cession rate than the rest of the
segment.
The decrease in earned premiums in 2023 was primarily due to
less favorable premium adjustments in 2023 compared to 2022,
primarily attributable to our professional liability and credit and
surety product lines, and the non-renewal of a large treaty within
our workers' compensation product line.
Combined Ratio
The increase in the Reinsurance segment's current accident year
loss ratio in 2023 compared to 2022 was primarily due to less
favorable premium adjustments on prior accident years in 2023
compared to 2022, primarily on our professional liability and
credit and surety product lines.
The Reinsurance segment's 2023 combined ratio included
$57.1 million of adverse development
on prior accident years loss reserves, which was driven by
$95.5 million, or nine points, of
adverse development on our general liability product lines and
$53.7 million, or five points, of
adverse development on our public entity product line. These
increases in prior accident year reserves in 2023 were partially
offset by favorable development across several product lines,
including our property and workers' compensation product lines.
Adverse development on our general liability product lines was
primarily attributable to large reported loss claims and adverse
loss development trends across multiple accident years.
Substantially all of the adverse development on our public entity
product line was attributable to a segment of this business that we
discontinued writing in 2020, which experienced an increased
frequency of large claims over the past several quarters, most
significantly on the 2014 to 2019 accident years. Adverse
development on both our general liability and public entity product
lines included notable strengthening as a result of actions taken
in the fourth quarter in response to changes in loss trends
observed in the reserve study previously discussed under "Insurance
Segment" and the expectation that those loss trends will ultimately
emerge within comparable reinsurance product lines.
Program Services, Insurance-linked Securities and Other
Insurance
|
Years Ended December
31,
|
|
2023
|
|
2022
|
(dollars in
thousands)
|
Operating
revenues
|
|
Operating
expenses
|
|
Net
|
|
Operating
revenues
|
|
Operating
expenses
|
|
Net
|
Services and
other:
|
|
|
|
|
|
|
|
|
|
|
|
Program services and
other fronting
|
$ 155,654
|
|
$
31,591
|
|
$ 124,063
|
|
$ 149,993
|
|
$
27,613
|
|
$ 122,380
|
Program services -
disposition gain
|
16,923
|
|
—
|
|
16,923
|
|
—
|
|
—
|
|
—
|
Insurance-linked
securities
|
97,550
|
|
75,950
|
|
21,600
|
|
109,020
|
|
125,316
|
|
(16,296)
|
Insurance-linked
securities - disposition gains
|
—
|
|
—
|
|
—
|
|
225,828
|
|
—
|
|
225,828
|
Life and
annuity
|
40
|
|
12,070
|
|
(12,030)
|
|
1,040
|
|
11,073
|
|
(10,033)
|
Markel CATCo
buy-out
|
—
|
|
—
|
|
—
|
|
—
|
|
101,904
|
|
(101,904)
|
Markel CATCo Re
(1)
|
—
|
|
(71,491)
|
|
71,491
|
|
—
|
|
(89,862)
|
|
89,862
|
Other
|
11,484
|
|
18,122
|
|
(6,638)
|
|
11,683
|
|
19,431
|
|
(7,748)
|
|
281,651
|
|
66,242
|
|
215,409
|
|
497,564
|
|
195,475
|
|
302,089
|
Underwriting
(2)
|
(1,520)
|
|
8,655
|
|
(10,175)
|
|
(3,818)
|
|
3,292
|
|
(7,110)
|
|
280,131
|
|
74,897
|
|
205,234
|
|
493,746
|
|
198,767
|
|
294,979
|
Amortization of
intangible assets
|
|
|
61,168
|
|
(61,168)
|
|
|
|
61,202
|
|
(61,202)
|
Impairment of
goodwill
|
|
|
—
|
|
—
|
|
|
|
80,000
|
|
(80,000)
|
|
$ 280,131
|
|
$ 136,065
|
|
$ 144,066
|
|
$ 493,746
|
|
$ 339,969
|
|
$ 153,777
|
|
|
(1)
|
Results attributable to
Markel CATCo Re were entirely attributable to noncontrolling
interest holders in Markel CATCo Re.
|
(2)
|
Underwriting results
attributable to our other insurance operations include results from
discontinued lines of business and the retained portion of our
program services operations.
|
Program Services and Other Fronting
The increase in operating revenues in 2023 was due to modest
increases at both our program services business and other fronting
operations as a result of higher gross premium volume in 2023
compared to 2022.
|
Years Ended December
31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
|
% Change
|
Gross premium
volume:
|
|
|
|
|
|
Program
services
|
$
2,883,737
|
|
$ 2,800,273
|
|
3 %
|
Other
fronting
|
$
840,868
|
|
$
553,871
|
|
52 %
|
The increase in gross premium volume within our program services
operations in 2023 was attributable to expansion of existing
programs and growth from new programs. The increase in gross
premium volume in our other fronting operating in 2023 was driven
by expansion of our property catastrophe programs with Nephila
Reinsurers and achieving more favorable rates on this business, as
well as growth from a new specialty program with Nephila
Reinsurers.
In June 2023, we sold Independent
Specialty Insurance Company, a subsidiary within our program
services operations, which resulted in a gain of $16.9 million.
Insurance-Linked Securities
The decrease in operating revenues and operating expenses in our
Nephila insurance-linked securities operations in 2023 was
primarily due to the disposition of our Velocity managing general
agent operations in February 2022,
which resulted in a gain of $107.3 million, and our Volante managing
general agent operations in October
2022, which resulted in a gain of $118.5 million. Following these sales, our
Nephila ILS operations are solely comprised of our fund management
operations. In 2023, the increase in operating revenues within our
fund management operations was primarily due to $31.1 million of management fees recognized upon
the release of capital from side pocket reserves. Nephila's net
assets under management were $6.8
billion as of December 31, 2023.
Markel CATCo Buy-Out
In March 2022, we completed a
buy-out transaction with Markel CATCo Re Ltd. and Markel CATCo
Reinsurance Fund Ltd. that resulted in the consolidation of Markel
CATCo Re Ltd. In order to complete the transaction, we made
$101.9 million in payments, net
of insurance proceeds, to or for the benefit of investors that were
recognized as an expense during the first quarter of 2022.
Investing Results
The following table summarizes our consolidated investment
performance, which consists predominantly of the results of our
Investing segment. Net investment gains or losses in any given
period are typically attributable to changes in the fair value of
our equity portfolio due to market value movements. The change in
net unrealized gains (losses) on available-for-sale investments in
any given period is typically attributable to changes in the fair
value of our fixed maturity portfolio due to changes in interest
rates during the period.
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
|
2021
|
|
2020
|
|
2019
|
Net investment
income
|
$
734,532
|
|
$
446,755
|
|
$ 367,417
|
|
$ 375,826
|
|
$ 442,182
|
Yield on fixed maturity
securities (1)
|
2.8 %
|
|
2.3 %
|
|
2.6 %
|
|
3.1 %
|
|
3.5 %
|
Yield on short-term
investments (1)
|
4.5 %
|
|
1.5 %
|
|
0.1 %
|
|
0.5 %
|
|
1.9 %
|
Yield on cash and cash
equivalents and restricted cash and cash equivalents
(1)
|
2.8 %
|
|
0.6 %
|
|
0.0 %
|
|
0.2 %
|
|
0.9 %
|
|
|
|
|
|
|
|
|
|
|
Net realized investment
gains (losses)
|
$
(42,177)
|
|
$
(40,983)
|
|
$
37,908
|
|
$
14,780
|
|
$
(1,482)
|
Change in fair value of
equity securities
|
1,566,231
|
|
(1,554,750)
|
|
1,940,626
|
|
603,199
|
|
1,603,204
|
Net investment gains
(losses)
|
$
1,524,054
|
|
$
(1,595,733)
|
|
$
1,978,534
|
|
$ 617,979
|
|
$ 1,601,722
|
|
|
|
|
|
|
|
|
|
|
Return on equity
securities (2)
|
21.6 %
|
|
(16.1) %
|
|
29.4 %
|
|
15.1 %
|
|
29.8 %
|
Five-year annual
return
|
14.6 %
|
|
9.3 %
|
|
18.4 %
|
|
15.2 %
|
|
11.4 %
|
Ten-year annual
return
|
11.9 %
|
|
12.9 %
|
|
16.9 %
|
|
14.3 %
|
|
14.7 %
|
Twenty-year annual
return
|
10.2 %
|
|
10.6 %
|
|
11.0 %
|
|
10.5 %
|
|
11.0 %
|
|
|
|
|
|
|
|
|
|
|
Other
|
$
(11,854)
|
|
$
(17,661)
|
|
$
7,184
|
|
$
(3,996)
|
|
$
9,706
|
Change in net
unrealized gains (losses) on available-for-sale
investments
|
$
390,558
|
|
$
(1,463,876)
|
|
$
(513,084)
|
|
$
510,247
|
|
$ 433,280
|
|
|
(1)
|
Yield reflects the
applicable interest income as a percentage of the applicable
monthly average invested assets at amortized cost.
|
(2)
|
Return on equity
securities is calculated by dividing dividends and the change in
fair value of equity securities by the monthly average equity
securities at fair value and considers the timing of net purchases
and sales.
|
The increase in net investment income in 2023 was primarily
attributable to higher interest income on cash equivalents, fixed
maturity securities and short-term investments due to higher yields
during 2023 compared to 2022. Throughout 2023, we increased our
allocation of cash to money market funds in response to increases
in short-term interest rates. Additionally, interest income on our
fixed maturity securities increased in part due to higher average
holdings of fixed maturity securities in 2023 compared to 2022.
During 2023, we continued to increase our allocation of cash and
short-term investments to fixed maturity securities in response to
increasing interest rates and to support our growing underwriting
business.
As of December 31, 2023, 97% of our fixed maturity
portfolio was rated "AA" or better.
Markel Ventures Results
|
Years Ended December 31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
|
Change
|
Operating
revenues
|
$
4,985,081
|
|
$
4,757,527
|
|
5 %
|
Operating income
(1)
|
$
437,508
|
|
$
325,238
|
|
35 %
|
EBITDA
(1)
|
$
628,483
|
|
$
506,336
|
|
24 %
|
Net income to
shareholders
|
$
265,106
|
|
$
192,601
|
|
38 %
|
|
|
(1)
|
See Supplemental
Financial Information for a reconciliation of Markel Ventures
operating income to Markel Ventures earnings before interest,
income taxes, depreciation and amortization (EBITDA).
|
The increase in operating revenues in 2023 was driven by higher
revenues at our construction services businesses and
transportation-related businesses, due to a combination of
increased demand, higher prices, and growth, as well as increased
production at one of our equipment manufacturing businesses
compared to 2022. The increase also reflected a full-year
contribution from Metromont, compared to an 11-month contribution
in 2022 following its acquisition. These increases in operating
revenues were partially offset by the impact of decreased demand at
our consumer and building products businesses, consulting services
businesses and one of our construction services businesses.
The increases in operating income, EBITDA and net income to
shareholders in 2023 were driven by our products businesses,
particularly our consumer and building products businesses, which
had higher margins in 2023 compared to 2022. In 2022, the operating
margins at many of our products businesses were impacted by
increased costs of materials, freight and labor, which reflected
the impact of broader economic conditions. As conditions stabilized
throughout 2023, particularly in regard to materials and freight
costs, our operating margins for those businesses improved. The
increases in operating income, EBITDA and net income to
shareholders at many of our businesses were partially offset by the
impact of lower revenues and operating margins at one of our
construction services businesses due to decreased demand.
Financial Condition
Investments, cash and cash equivalents and restricted cash and
cash equivalents (invested assets) were $30.9 billion at December 31, 2023
compared to $27.4 billion at
December 31, 2022. The increase was primarily attributable to
operating cash flows, as well as an increase in the fair value of
our equity portfolio. Net cash provided by operating activities was
$2.8 billion in 2023 compared to
$2.7 billion in 2022, reflecting an
increase in operating cash flows from Markel Ventures and
investments, partially offset by a decrease in operating cash flows
from our insurance operations.
At December 31, 2023, our holding company held $3.5 billion of invested assets compared to
$3.7 billion of invested assets
at December 31, 2022. The decrease was primarily due to
repurchases of $445.5 million of our
common stock and the retirement of our 3.625% unsecured senior
notes due March 30, 2023, partially
offset by dividends received from our insurance subsidiaries and an
increase in the fair value of equity securities held by our holding
company.
* * * * * * * *
Our previously announced conference call, which will
involve discussion of our financial results and business
developments and may include forward-looking information, will be
held Thursday, February 1, 2024,
beginning at 9:30 a.m. (Eastern
Time). Investors, analysts and the general public may listen
to the call via live webcast at ir.mklgroup.com. The call may be
accessed telephonically by dialing (888) 660-9916 in the U.S., or
(646) 960-0452 internationally, and providing Conference ID:
4614568. Any person needing additional information can contact
Markel Group's Investor Relations Department at IR@markel.com. A
replay of the call will be available on our website approximately
one hour after the conclusion of the call.
Additionally, we will be discussing financial results and
related business and investments updates at our shareholders
meeting on May 22, 2024 at the
University of Richmond Robins Center at
2:00 p.m. (Eastern Time). The
shareholders meeting will be part of a two-day event we are calling
the 2024 Reunion, which is open to shareholders, employees, and
friends of Markel Group. More information on the agenda and
registration for the 2024 Reunion is available at
mklreunion.com.
Safe Harbor and Cautionary Statement
This release contains statements concerning or incorporating our
expectations, assumptions, plans, objectives, future financial or
operating performance and other statements that are not historical
facts. These statements are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements may use words such as "anticipate," "believe,"
"estimate," "expect," "intend," "predict," "project" and similar
expressions as they relate to us or our management.
There are risks and uncertainties that may cause actual results
to differ materially from predicted results in forward-looking
statements. Factors that may cause actual results to differ are
often presented with the forward-looking statements themselves.
Additional factors that could cause actual results to differ from
those predicted are set forth under "Business," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Quantitative and Qualitative
Disclosures About Market Risk" in our 2022 Annual Report on Form
10-K, or our most recent Quarterly Report on Form 10-Q, or are
included in the items listed below:
- the effect of cyclical trends or changes in market conditions
on our underwriting, investing, Markel Ventures and other
operations, including demand and pricing in the insurance,
reinsurance and other markets in which we operate;
- actions by competitors, including the use of technology and
innovation to simplify the customer experience, increase
efficiencies, redesign products, alter models and effect other
potentially disruptive changes in the insurance industry, and the
effect of competition on market trends and pricing;
- our efforts to develop new products, expand in targeted markets
or improve business processes and workflows may not be successful
and may increase or create new risks (e.g., insufficient demand,
change to risk exposures, distribution channel conflicts, execution
risk, regulatory risk, increased expenditures);
- the frequency and severity of man-made, health-related and
natural catastrophes may exceed expectations, are unpredictable
and, in the case of some natural catastrophes, may be exacerbated
by changing conditions in the climate, oceans and atmosphere,
resulting in increased frequency and/or severity of extreme
weather-related events;
- we offer insurance and reinsurance coverage against terrorist
acts in connection with some of our programs, and in other
instances we are legally required to offer terrorism insurance; in
both circumstances, we actively manage our exposure, but if there
is a covered terrorist attack, we could sustain material
losses;
- emerging claim and coverage issues, changing industry practices
and evolving legal, judicial, social and other claims and coverage
trends or conditions, can increase the scope of coverage, the
frequency and severity of claims and the period over which claims
may be reported; these factors, as well as uncertainties in the
loss estimation process, can adversely impact the adequacy of our
loss reserves and our allowance for reinsurance recoverables;
- reinsurance reserves are subject to greater uncertainty than
insurance reserves, primarily because of reliance upon the original
underwriting decisions made by ceding companies and the longer
lapse of time from the occurrence of loss events to their reporting
to the reinsurer for ultimate resolution;
- inaccuracies (whether due to data error, human error or
otherwise) in the various modeling techniques and data analytics
(e.g., scenarios, predictive and stochastic modeling, and
forecasting) we use to analyze and estimate exposures, loss trends
and other risks associated with our insurance and insurance-linked
securities businesses could cause us to misprice our products or
fail to appropriately estimate the risks to which we are
exposed;
- changes in the assumptions and estimates used in establishing
reserves for our life and annuity reinsurance book (which is in
runoff), for example, changes in assumptions and estimates of
mortality, longevity, morbidity and interest rates, could result in
material changes in our estimated loss reserves for that
business;
- adverse developments in insurance coverage litigation or other
legal or administrative proceedings could result in material
increases in our estimates of loss reserves;
- initial estimates for catastrophe losses and other significant,
infrequent events are often based on limited information, are
dependent on broad assumptions about the nature and extent of
losses, coverage, liability and reinsurance, and those losses may
ultimately differ materially from our expectations;
- changes in the availability, costs, quality and providers of
reinsurance coverage, which may impact our ability to write or
continue to write certain lines of business or to mitigate the
volatility of losses on our results of operations and financial
condition;
- the ability or willingness of reinsurers to pay balances due
may be adversely affected by industry and economic conditions,
deterioration in reinsurer credit quality and coverage disputes,
and collateral we hold, if any, may not be sufficient to cover a
reinsurer's obligation to us;
- after the commutation of ceded reinsurance contracts, any
subsequent adverse development in the re-assumed loss reserves will
result in a charge to earnings;
- regulatory actions can impede our ability to charge adequate
rates and efficiently allocate capital;
- general economic and market conditions and industry specific
conditions, including extended economic recessions or expansions;
prolonged periods of slow economic growth; inflation or deflation;
fluctuations in foreign currency exchange rates, commodity and
energy prices and interest rates; volatility in the credit and
capital markets; and other factors;
- economic conditions, actual or potential defaults in corporate
bonds, municipal bonds, mortgage-backed securities or sovereign
debt obligations, volatility in interest and foreign currency
exchange rates, changes in U.S. government debt ratings and changes
in market value of concentrated investments can have a significant
impact on the fair value of our fixed maturity securities and
equity securities, as well as the carrying value of our other
assets and liabilities, and this impact may be heightened by market
volatility and our ability to mitigate our sensitivity to these
changing conditions;
- economic conditions may adversely affect our access to capital
and credit markets;
- the effects of government intervention, including material
changes in the monetary policies of central banks, to address
financial downturns, inflation and other economic and currency
concerns;
- the impacts that political and civil unrest and regional
conflicts may have on our businesses and the markets they serve or
that any disruptions in regional or worldwide economic conditions
generally arising from these situations may have on our businesses,
industries or investments;
- the impacts of liability, transaction and physical risks
associated with climate change;
- the significant volatility, uncertainty and disruption caused
by health epidemics and pandemics, as well as governmental,
legislative, judicial or regulatory actions or developments in
response thereto;
- changes in U.S. tax laws, regulations or interpretations, or in
the tax laws, regulations or interpretations of other jurisdictions
in which we operate, and adjustments we may make in our operations
or tax strategies in response to those changes;
- a failure or security breach of, or cyberattack on, enterprise
information technology systems that we, or third parties who
perform certain functions for us, use or a failure to comply with
data protection or privacy regulations;
- third-party providers may perform poorly, breach their
obligations to us or expose us to enhanced risks;
- our acquisitions may increase our operational and internal
control risks for a period of time;
- we may not realize the contemplated benefits, including cost
savings and synergies, of our acquisitions;
- any determination requiring the write-off of a significant
portion of our goodwill and intangible assets;
- the failure or inadequacy of any methods we employ to manage
our loss exposures;
- the loss of services of any senior executive or other key
personnel, or an inability to attract and retain qualified
personnel, for our businesses could adversely impact one or more of
our operations;
- the manner in which we manage our global operations through a
network of business entities could result in inconsistent
management, governance and oversight practices and make it
difficult for us to implement strategic decisions and coordinate
procedures;
- our substantial international operations and investments expose
us to increased political, civil, operational and economic risks,
including foreign currency exchange rate and credit risk;
- our ability to obtain additional capital for our operations on
terms favorable to us;
- the compliance, or failure to comply, with covenants and other
requirements under our credit facilities, senior debt and other
indebtedness and our preferred shares;
- our ability to maintain or raise third-party capital for
existing or new investment vehicles and risks related to our
management of third-party capital;
- the effectiveness of our procedures for compliance with
existing and future guidelines, policies and legal and regulatory
standards, rules, laws and regulations;
- the impact of economic and trade sanctions and embargo programs
on our businesses, including instances in which the requirements
and limitations applicable to the global operations of U.S.
companies and their affiliates are more restrictive than, or
conflict with, those applicable to non-U.S. companies and their
affiliates;
- regulatory changes, or challenges by regulators, regarding the
use of certain issuing carrier or fronting arrangements;
- our dependence on a limited number of brokers for a large
portion of our revenues and third-party capital;
- adverse changes in our assigned financial strength, debt or
preferred share ratings or outlook could adversely impact us,
including our ability to attract and retain business, the amount of
capital our insurance subsidiaries must hold and the availability
and cost of capital;
- changes in the amount of statutory capital our insurance
subsidiaries are required to hold, which can vary significantly and
is based on many factors, some of which are outside our
control;
- losses from litigation and regulatory investigations and
actions; and
- a number of additional factors may adversely affect our Markel
Ventures operations, and the markets they serve, and negatively
impact their revenues and profitability, including, among others:
adverse weather conditions, plant disease and other contaminants;
changes in government support for education, healthcare and
infrastructure projects; changes in capital spending levels;
changes in the housing, commercial and industrial construction
markets; liability for environmental matters; supply chain and
shipping issues, including increases in freight costs; volatility
in the market prices for their products; and volatility in
commodity, wholesale and raw materials prices and interest and
foreign currency exchange rates.
Results from our underwriting, investing, Markel Ventures and
other operations have been and will continue to be potentially
materially affected by these factors.
By making forward-looking statements, we do not intend to become
obligated to publicly update or revise any such statements whether
as a result of new information, future events or other changes.
Readers are cautioned not to place undue reliance on any
forward-looking statements, which are based on our current
knowledge and speak only as at their dates.
* * * * * * * *
About Markel Group
Markel Group Inc. is a diverse family of companies that
includes everything from insurance to bakery equipment, building
supplies, houseplants, and more. The leadership teams of these
businesses operate with a high degree of independence, while at the
same time living the values that we call the Markel Style. Our
specialty insurance business sits at the core of our company.
Through decades of sound underwriting, the insurance team has
provided the capital base from which we built a system of
businesses and investments that collectively increase Markel
Group's durability and adaptability. It's a system that provides
diverse income streams, access to a wide range of investment
opportunities, and the ability to efficiently move capital to the
best ideas across the company. Most importantly though, this system
enables each of our businesses to advance our shared goal of
helping our customers, associates, and shareholders win over the
long term. Visit mklgroup.com to learn more.
Markel Group Inc.
and Subsidiaries
Condensed Consolidated Statements of
Income (Loss) and Comprehensive Income (Loss)
|
|
|
Quarters Ended December
31,
|
|
Years Ended December
31,
|
(dollars in
thousands, except per share data)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Earned
premiums
|
$
2,174,887
|
|
$
2,038,088
|
|
$
8,295,479
|
|
$
7,587,792
|
Net investment
income
|
213,297
|
|
145,069
|
|
734,532
|
|
446,755
|
Net investment gains
(losses)
|
932,881
|
|
598,792
|
|
1,524,054
|
|
(1,595,733)
|
Products
revenues
|
580,721
|
|
581,985
|
|
2,545,053
|
|
2,427,096
|
Services and other
revenues
|
740,733
|
|
846,813
|
|
2,704,512
|
|
2,809,425
|
Total Operating
Revenues
|
4,642,519
|
|
4,210,747
|
|
15,803,630
|
|
11,675,335
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Losses and loss
adjustment expenses
|
1,556,794
|
|
1,229,094
|
|
5,322,009
|
|
4,445,589
|
Underwriting,
acquisition and insurance expenses
|
769,013
|
|
672,477
|
|
2,840,734
|
|
2,515,583
|
Products
expenses
|
507,884
|
|
515,369
|
|
2,220,676
|
|
2,241,736
|
Services and other
expenses
|
632,523
|
|
613,229
|
|
2,310,769
|
|
2,306,985
|
Amortization of
intangible assets
|
44,247
|
|
43,788
|
|
180,614
|
|
178,778
|
Impairment of
goodwill
|
—
|
|
80,000
|
|
—
|
|
80,000
|
Total Operating
Expenses
|
3,510,461
|
|
3,153,957
|
|
12,874,802
|
|
11,768,671
|
Operating Income
(Loss)
|
1,132,058
|
|
1,056,790
|
|
2,928,828
|
|
(93,336)
|
Interest
expense
|
(43,865)
|
|
(48,972)
|
|
(185,077)
|
|
(196,062)
|
Net foreign exchange
gains (losses)
|
(81,387)
|
|
(103,874)
|
|
(90,045)
|
|
137,832
|
Income (Loss) Before
Income Taxes
|
1,006,806
|
|
903,944
|
|
2,653,706
|
|
(151,566)
|
Income tax (expense)
benefit
|
(212,713)
|
|
(192,420)
|
|
(552,616)
|
|
48,209
|
Net Income
(Loss)
|
794,093
|
|
711,524
|
|
2,101,090
|
|
(103,357)
|
Net income attributable
to noncontrolling interests
|
(24,787)
|
|
(19,858)
|
|
(105,030)
|
|
(112,920)
|
Net Income (Loss) to
Shareholders
|
769,306
|
|
691,666
|
|
1,996,060
|
|
(216,277)
|
Preferred stock
dividends
|
(18,000)
|
|
(18,000)
|
|
(36,000)
|
|
(36,000)
|
Net Income (Loss) to
Common Shareholders
|
$
751,306
|
|
$ 673,666
|
|
$
1,960,060
|
|
$
(252,277)
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS)
|
|
|
|
|
|
|
|
Change in net
unrealized gains (losses) on available-for-sale investments, net of
taxes
|
$
441,750
|
|
$ 151,402
|
|
$
306,903
|
|
$
(1,154,830)
|
Other, net of
taxes
|
(29,155)
|
|
28,797
|
|
(17,565)
|
|
165,345
|
Total Other
Comprehensive Income (Loss)
|
412,595
|
|
180,199
|
|
289,338
|
|
(989,485)
|
Comprehensive Income
(Loss)
|
1,206,688
|
|
891,723
|
|
2,390,428
|
|
(1,092,842)
|
Comprehensive income
attributable to noncontrolling interests
|
(24,758)
|
|
(19,941)
|
|
(105,084)
|
|
(112,937)
|
Comprehensive Income
(Loss) to Shareholders
|
$
1,181,930
|
|
$ 871,782
|
|
$
2,285,344
|
|
$
(1,205,779)
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER
COMMON SHARE
|
|
|
|
|
|
|
|
Basic
|
$
56.67
|
|
$
49.35
|
|
$
147.32
|
|
$
(23.72)
|
Diluted
|
$
56.48
|
|
$
49.20
|
|
$
146.98
|
|
$
(23.72)
|
Selected
Data
|
|
|
December 31,
|
(in thousands,
except per share data)
|
2023
|
|
2022
|
Invested
assets
|
$
30,854,019
|
|
$
27,419,522
|
Reinsurance
recoverables
|
$
9,235,501
|
|
$ 8,446,745
|
Goodwill and intangible
assets
|
$
4,213,433
|
|
$ 4,386,302
|
Total assets
|
$
55,045,710
|
|
$
49,791,259
|
Unpaid losses and loss
adjustment expenses
|
$
23,483,321
|
|
$
20,947,898
|
Senior long-term debt
and other debt
|
$
3,779,796
|
|
$ 4,103,629
|
Total shareholders'
equity
|
$
14,983,928
|
|
$
13,151,094
|
Book value per common
share
|
$
1,095.95
|
|
$
935.65
|
Common shares
outstanding
|
13,132
|
|
13,423
|
Markel Group Inc.
and Subsidiaries
Supplemental
Financial Information
Components of Consolidated Operating
Income
Segment
Results
|
|
|
Quarter Ended
December 31, 2023
|
(dollars in
thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel
Ventures
|
|
Other
(1)
|
|
Consolidated
|
Earned
premiums
|
$
1,960,328
|
|
$
214,611
|
|
$
—
|
|
$
—
|
|
$
(52)
|
|
$
2,174,887
|
Net investment
income
|
—
|
|
—
|
|
210,683
|
|
2,614
|
|
—
|
|
213,297
|
Net investment
gains
|
—
|
|
—
|
|
932,881
|
|
—
|
|
—
|
|
932,881
|
Products
revenues
|
—
|
|
—
|
|
—
|
|
580,721
|
|
—
|
|
580,721
|
Services and other
revenues
|
—
|
|
—
|
|
1,937
|
|
663,718
|
|
75,078
|
|
740,733
|
Total operating
revenues
|
1,960,328
|
|
214,611
|
|
1,145,501
|
|
1,247,053
|
|
75,026
|
|
4,642,519
|
Losses and loss
adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident
year
|
(1,274,885)
|
|
(150,705)
|
|
—
|
|
—
|
|
—
|
|
(1,425,590)
|
Prior accident
years
|
(74,821)
|
|
(50,497)
|
|
—
|
|
—
|
|
(5,886)
|
|
(131,204)
|
Underwriting,
acquisition and insurance expenses
|
(704,693)
|
|
(66,280)
|
|
—
|
|
—
|
|
1,960
|
|
(769,013)
|
Products
expenses
|
—
|
|
—
|
|
—
|
|
(507,884)
|
|
—
|
|
(507,884)
|
Services and other
expenses
|
—
|
|
—
|
|
—
|
|
(611,939)
|
|
(20,584)
|
|
(632,523)
|
Amortization of
intangible assets (2)
|
—
|
|
—
|
|
—
|
|
(19,842)
|
|
(24,405)
|
|
(44,247)
|
Operating income
(loss)
|
$
(94,071)
|
|
$
(52,871)
|
|
$
1,145,501
|
|
$
107,388
|
|
$
26,111
|
|
$
1,132,058
|
|
|
Quarter Ended
December 31, 2022
|
(dollars in
thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel
Ventures
|
|
Other
(1)
|
|
Consolidated
|
Earned
premiums
|
$
1,786,085
|
|
$
254,691
|
|
$
—
|
|
$
—
|
|
$
(2,688)
|
|
$
2,038,088
|
Net investment
income
|
—
|
|
—
|
|
144,584
|
|
485
|
|
—
|
|
145,069
|
Net investment
gains
|
—
|
|
—
|
|
598,792
|
|
—
|
|
—
|
|
598,792
|
Products
revenues
|
—
|
|
—
|
|
—
|
|
581,985
|
|
—
|
|
581,985
|
Services and other
revenues
|
—
|
|
—
|
|
9,902
|
|
647,204
|
|
189,707
|
|
846,813
|
Total operating
revenues
|
1,786,085
|
|
254,691
|
|
753,278
|
|
1,229,674
|
|
187,019
|
|
4,210,747
|
Losses and loss
adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident
year
|
(1,030,394)
|
|
(161,735)
|
|
—
|
|
—
|
|
—
|
|
(1,192,129)
|
Prior accident
years
|
(53,169)
|
|
12,207
|
|
—
|
|
—
|
|
3,997
|
|
(36,965)
|
Underwriting,
acquisition and insurance expenses
|
(592,096)
|
|
(81,681)
|
|
—
|
|
—
|
|
1,300
|
|
(672,477)
|
Products
expenses
|
—
|
|
—
|
|
—
|
|
(515,369)
|
|
—
|
|
(515,369)
|
Services and other
expenses
|
—
|
|
—
|
|
—
|
|
(587,343)
|
|
(25,886)
|
|
(613,229)
|
Amortization of
intangible assets (2)
|
—
|
|
—
|
|
—
|
|
(18,966)
|
|
(24,822)
|
|
(43,788)
|
Impairment of goodwill
and intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
(80,000)
|
|
(80,000)
|
Operating
income
|
$
110,426
|
|
$
23,482
|
|
$
753,278
|
|
$
107,996
|
|
$
61,608
|
|
$
1,056,790
|
|
|
(1)
|
Other represents the
total profit (loss) attributable to our operations that are not
included in a reportable segment, as well as amortization of
intangible assets attributable to our underwriting segments, which
is not allocated between the Insurance and Reinsurance
segments.
|
(2)
|
Segment profit for the
Markel Ventures segment includes amortization of intangible assets
attributable to Markel Ventures.
|
|
Year Ended
December 31, 2023
|
(dollars in
thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel
Ventures
|
|
Other
(1)
|
|
Consolidated
|
Earned
premiums
|
$
7,282,705
|
|
$
1,014,294
|
|
$
—
|
|
$
—
|
|
$
(1,520)
|
|
$
8,295,479
|
Net investment
income
|
—
|
|
—
|
|
729,219
|
|
5,313
|
|
—
|
|
734,532
|
Net investment
gains
|
—
|
|
—
|
|
1,524,054
|
|
—
|
|
—
|
|
1,524,054
|
Products
revenues
|
—
|
|
—
|
|
—
|
|
2,545,053
|
|
—
|
|
2,545,053
|
Services and other
revenues
|
—
|
|
—
|
|
(11,854)
|
|
2,434,715
|
|
281,651
|
|
2,704,512
|
Total operating
revenues
|
7,282,705
|
|
1,014,294
|
|
2,241,419
|
|
4,985,081
|
|
280,131
|
|
15,803,630
|
Losses and loss
adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident
year
|
(4,690,745)
|
|
(669,814)
|
|
—
|
|
—
|
|
—
|
|
(5,360,559)
|
Prior accident
years
|
104,743
|
|
(57,081)
|
|
—
|
|
—
|
|
(9,112)
|
|
38,550
|
Underwriting,
acquisition and insurance expenses
|
(2,534,527)
|
|
(306,664)
|
|
—
|
|
—
|
|
457
|
|
(2,840,734)
|
Products
expenses
|
—
|
|
—
|
|
—
|
|
(2,220,676)
|
|
—
|
|
(2,220,676)
|
Services and other
expenses
|
—
|
|
—
|
|
—
|
|
(2,244,527)
|
|
(66,242)
|
|
(2,310,769)
|
Amortization of
intangible assets (2)
|
—
|
|
—
|
|
—
|
|
(82,370)
|
|
(98,244)
|
|
(180,614)
|
Operating income
(loss)
|
$
162,176
|
|
$
(19,265)
|
|
$
2,241,419
|
|
$
437,508
|
|
$
106,990
|
|
$
2,928,828
|
|
|
Year Ended
December 31, 2022
|
(dollars in
thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel
Ventures
|
|
Other
(1)
|
|
Consolidated
|
Earned
premiums
|
$
6,528,263
|
|
$
1,063,347
|
|
$
—
|
|
$
—
|
|
$
(3,818)
|
|
$
7,587,792
|
Net investment
income
|
—
|
|
—
|
|
445,846
|
|
909
|
|
—
|
|
446,755
|
Net investment
losses
|
—
|
|
—
|
|
(1,595,733)
|
|
—
|
|
—
|
|
(1,595,733)
|
Products
revenues
|
—
|
|
—
|
|
—
|
|
2,427,096
|
|
—
|
|
2,427,096
|
Services and other
revenues
|
—
|
|
—
|
|
(17,661)
|
|
2,329,522
|
|
497,564
|
|
2,809,425
|
Total operating
revenues
|
6,528,263
|
|
1,063,347
|
|
(1,167,548)
|
|
4,757,527
|
|
493,746
|
|
11,675,335
|
Losses and loss
adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident
year
|
(3,936,425)
|
|
(676,610)
|
|
—
|
|
—
|
|
—
|
|
(4,613,035)
|
Prior accident
years
|
142,924
|
|
26,052
|
|
—
|
|
—
|
|
(1,530)
|
|
167,446
|
Underwriting,
acquisition and insurance expenses
|
(2,184,891)
|
|
(328,930)
|
|
—
|
|
—
|
|
(1,762)
|
|
(2,515,583)
|
Products
expenses
|
—
|
|
—
|
|
—
|
|
(2,241,736)
|
|
—
|
|
(2,241,736)
|
Services and other
expenses
|
—
|
|
—
|
|
—
|
|
(2,111,510)
|
|
(195,475)
|
|
(2,306,985)
|
Amortization of
intangible assets (2)
|
—
|
|
—
|
|
—
|
|
(79,043)
|
|
(99,735)
|
|
(178,778)
|
Impairment of
goodwill
|
—
|
|
—
|
|
—
|
|
—
|
|
(80,000)
|
|
(80,000)
|
Operating income
(loss)
|
$
549,871
|
|
$
83,859
|
|
$
(1,167,548)
|
|
$
325,238
|
|
$
115,244
|
|
$
(93,336)
|
|
|
(1)
|
Other represents the
total profit (loss) attributable to our operations that are not
included in a reportable segment as well as amortization of
intangible assets attributable to our underwriting segments, which
is not allocated between the Insurance and Reinsurance
segments.
|
(2)
|
Segment profit for the
Markel Ventures segment includes amortization of intangible assets
attributable to Markel Ventures.
|
Underwriting
Results
Quarter-to-Date
Premium Volume
|
|
|
Quarters Ended December
31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
Gross premium
volume:
|
|
|
|
Insurance
segment
|
$
2,290,868
|
|
$
2,126,911
|
Reinsurance
segment
|
87,341
|
|
185,024
|
Other
underwriting
|
531
|
|
3,631
|
Total
underwriting
|
2,378,740
|
|
2,315,566
|
Program services and
other fronting
|
720,494
|
|
733,009
|
Total
|
$
3,099,234
|
|
$
3,048,575
|
|
|
|
|
Net written
premium:
|
|
|
|
Insurance
segment
|
$
1,868,181
|
|
$
1,751,011
|
Reinsurance
segment
|
76,782
|
|
184,225
|
Other
underwriting
|
(441)
|
|
(4,609)
|
Total
underwriting
|
1,944,522
|
|
1,930,627
|
Program services and
other fronting
|
(223)
|
|
(933)
|
Total
|
$
1,944,299
|
|
$
1,929,694
|
Components of
Quarter-to-Date Combined Ratio
|
|
|
Quarters Ended December
31,
|
|
2023
|
|
2022
|
|
Insurance
|
|
Reinsurance
|
|
Consolidated
|
|
Insurance
|
|
Reinsurance
|
|
Consolidated
|
Underwriting Ratios
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio
|
65.0 %
|
|
70.2 %
|
|
65.5 %
|
|
57.7 %
|
|
63.5 %
|
|
58.5 %
|
Prior accident years
loss ratio
|
3.8 %
|
|
23.5 %
|
|
6.0 %
|
|
3.0 %
|
|
(4.8) %
|
|
1.8 %
|
Loss ratio
|
68.9 %
|
|
93.8 %
|
|
71.6 %
|
|
60.7 %
|
|
58.7 %
|
|
60.3 %
|
Expense
ratio
|
35.9 %
|
|
30.9 %
|
|
35.4 %
|
|
33.2 %
|
|
32.1 %
|
|
33.0 %
|
Combined
ratio
|
104.8 %
|
|
124.6 %
|
|
106.9 %
|
|
93.8 %
|
|
90.8 %
|
|
93.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio event impact (2)
|
(0.2) %
|
|
(0.6) %
|
|
(0.3) %
|
|
(1.2) %
|
|
(0.9) %
|
|
(1.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio, excluding impact of events
|
65.3 %
|
|
70.9 %
|
|
65.8 %
|
|
58.9 %
|
|
64.4 %
|
|
59.6 %
|
Combined ratio,
excluding current year impact of events
|
105.0 %
|
|
125.3 %
|
|
107.2 %
|
|
95.0 %
|
|
91.7 %
|
|
94.4 %
|
|
|
(1)
|
Amounts may not
reconcile due to rounding.
|
(2)
|
Event impact represents
the impact of catastrophes in 2023 and 2022, as well as the
Russia-Ukraine conflict in 2022. The point impact is calculated as
the associated net losses and loss adjustment expenses divided by
total earned premiums.
|
Net Income per
Common Share
|
|
|
Quarters Ended December
31,
|
|
Years Ended December
31,
|
(in thousands,
except per share amounts)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income (loss) to
common shareholders
|
$
751,306
|
|
$
673,666
|
|
$
1,960,060
|
|
$
(252,277)
|
Adjustment of
redeemable noncontrolling interests
|
(875)
|
|
(7,728)
|
|
6,212
|
|
(69,896)
|
Adjusted net income
(loss) to common shareholders
|
$
750,431
|
|
$
665,938
|
|
$
1,966,272
|
|
$
(322,173)
|
|
|
|
|
|
|
|
|
Basic common shares
outstanding
|
13,242
|
|
13,494
|
|
13,347
|
|
13,580
|
Dilutive potential
common shares from restricted stock units and restricted stock
(1)
|
44
|
|
42
|
|
31
|
|
—
|
Diluted common shares
outstanding
|
13,286
|
|
13,536
|
|
13,378
|
|
13,580
|
Basic net income (loss)
per common share
|
$
56.67
|
|
$
49.35
|
|
$
147.32
|
|
$
(23.72)
|
Diluted net income
(loss) per common share (1)
|
$
56.48
|
|
$
49.20
|
|
$
146.98
|
|
$
(23.72)
|
|
|
(1)
|
The impact of 33
thousand shares from restricted stock units and restricted stock
was excluded from the computation of diluted net loss per common
share for the year ended December 31, 2022 because the effect
would have been anti-dilutive.
|
Non-GAAP Financial Measures
Underwriting
In addition to the U.S. GAAP combined ratio, loss ratio and
expense ratio, we also evaluate our underwriting performance using
measures that exclude the impacts of certain items on these ratios.
We believe these adjusted measures, which are non-GAAP measures,
provide financial statement users with a better understanding of
the significant factors that comprise our underwriting results and
how management evaluates underwriting performance.
When analyzing our combined ratio, we exclude current accident
year losses and loss adjustment expenses attributed to natural
catastrophes and certain other significant, infrequent loss events,
for example, the on-going military conflict between Russia and Ukraine that began following Russia's invasion of Ukraine in February
2022. Due to the unique characteristics of a catastrophe
loss and other significant, infrequent events, there is inherent
variability as to the timing or loss amount, which cannot be
predicted in advance. We believe measures that exclude the effects
of such events are meaningful to understand the underlying trends
and variability in our underwriting results that may be obscured by
these items.
When analyzing our loss ratio, we evaluate losses and loss
adjustment expenses attributable to the current accident year
separate from losses and loss adjustment expenses attributable to
prior accident years. Prior accident year reserve development,
which can either be favorable or unfavorable, represents changes in
our estimates of losses and loss adjustment expenses related to
loss events that occurred in prior years. We believe a discussion
of current accident year loss ratios, which exclude prior accident
year reserve development, is helpful since it provides more insight
into estimates of current underwriting performance and excludes
changes in estimates related to prior year loss reserves. We also
analyze our current accident year loss ratio excluding losses and
loss adjustment expenses attributable to catastrophes and, in 2022,
the Russia-Ukraine conflict. The current accident year
loss ratio excluding the impact of catastrophes and other
significant, infrequent loss events is also commonly referred to as
an attritional loss ratio within the property and casualty
insurance industry.
The components of our consolidated and segment combined ratios,
including the non-GAAP measures discussed above, are included in
"Insurance Results".
Markel Ventures
Markel Ventures EBITDA is a non-GAAP financial measure. We use
Markel Ventures EBITDA as an operating performance measure in
conjunction with U.S. GAAP measures, including operating income and
net income to shareholders, to monitor and evaluate the performance
of our Markel Ventures segment. Because EBITDA excludes interest,
income taxes, depreciation and amortization, it provides an
indicator of economic performance that is useful to both management
and investors in evaluating our Markel Ventures businesses as it is
not affected by levels of debt, interest rates, effective tax rates
or levels of depreciation or amortization resulting from purchase
accounting. The following table reconciles Markel Ventures
operating income to Markel Ventures EBITDA.
|
Quarters Ended December
31,
|
|
Years Ended December
31,
|
(dollars in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Markel Ventures
operating income
|
$
107,388
|
|
$
107,996
|
|
$
437,508
|
|
$
325,238
|
Depreciation
expense
|
26,966
|
|
26,751
|
|
108,605
|
|
102,055
|
Amortization of
intangible assets
|
19,842
|
|
18,966
|
|
82,370
|
|
79,043
|
Markel Ventures
EBITDA
|
$
154,196
|
|
$
153,713
|
|
$
628,483
|
|
$
506,336
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/markel-group-reports-2023-financial-results-302049898.html
SOURCE Markel Group