RICHMOND, Va., Feb. 2,
2022 /PRNewswire/ -- Markel Corporation (NYSE: MKL) today
reported its financial results for the year ended December 31,
2021.
The following tables present summary financial data for 2021 and
2020.
|
Years Ended December
31,
|
(in thousands,
except per share amounts)
|
2021
|
|
2020
|
Earned
premiums
|
$
|
6,503,029
|
|
$
|
5,612,205
|
Markel Ventures
operating revenues
|
$
|
3,643,827
|
|
$
|
2,794,959
|
Net investment
gains
|
$
|
1,978,534
|
|
$
|
617,979
|
Comprehensive income
to shareholders
|
$
|
2,078,244
|
|
$
|
1,191,634
|
Diluted net income
per common share
|
$
|
176.51
|
|
$
|
55.63
|
Combined
Ratio
|
|
90
%
|
|
|
98 %
|
|
|
|
|
(in thousands,
except per share amounts)
|
December 31,
2021
|
|
December 31,
2020
|
Book value per common
share outstanding
|
$
|
1,034.56
|
|
$
|
885.72
|
Common shares
outstanding
|
|
13,632
|
|
|
13,783
|
Highlights of our 2021 results include:
- Earned premiums grew 16% in 2021, reflecting continued growth
in gross premium volume from new business and more favorable
rates.
- The lower combined ratio in 2021 compared to 2020 was primarily
due to significant losses attributed to COVID-19 in 2020 and a
lower attritional loss ratio due in part to the benefit of a
favorable pricing environment.
- Net investment gains in 2021 reflected a substantial increase
in the fair value of our equity portfolio driven by favorable
market value movements during the year.
- Operating revenues, operating income and EBITDA from our Markel
Ventures operations in 2021 continued to expand through both
acquisitions and organic growth.
- Comprehensive income to shareholders in 2021 reflected the
contribution of net income, partially offset by decreases in net
unrealized gains on our fixed maturity portfolio.
"Our 2021 results show what we can achieve when all three of our
operating engines – insurance, investments and Markel Ventures –
power us forward. Each contributed in meaningful ways to a
record-setting 2021 across many financial metrics, including
operating revenues and operating income, among others," said
Thomas S. Gayner and Richard R. Whitt, Co-Chief Executive Officers.
"Our underwriting operations delivered a 90% combined ratio, which
reflected the impact of recent underwriting actions we've taken to
enhance our profitability while growing gross premium volume to
$8.5 billion."
"We added two tremendous companies, Buckner and Metromont, to our Markel Ventures
family of companies during a year in which revenues and EBITDA far
surpassed previous record levels," Gayner and Whitt continued. "Our
investment portfolio provided strong returns on the back of the
terrific performance of our equity portfolio."
"We thank our employees, trading partners and customers, all of
whom have played a tremendous role in our record-setting year as we
continue our efforts to build shareholder value. We are especially
grateful for our employees, who performed admirably in 2021 and
continue to show their dedication to building Markel into one of
the world's great companies."
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
longer-term perspective we apply to operating our businesses. We
generally use five-year periods to measure our performance. Over
the five-year period ended December 31, 2021, the compound
annual growth in book value per common share outstanding was 11%.
Over the five-year period ended December 31, 2021, our share
price increased at a compound annual rate of 6%.
Underwriting Results
Consolidated
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2021
|
|
2020
|
|
% Change
|
Gross premium volume
(1)
|
$
|
8,480,494
|
|
$
|
7,154,628
|
|
19 %
|
Net written
premiums
|
$
|
7,119,731
|
|
$
|
5,932,238
|
|
20 %
|
Earned
premiums
|
$
|
6,503,029
|
|
$
|
5,612,205
|
|
16 %
|
Underwriting
profit
|
$
|
628,085
|
|
$
|
127,617
|
|
392 %
|
|
|
|
|
|
|
|
|
Underwriting
Ratios (2)
|
|
|
|
|
|
|
Point
Change
|
Loss ratio
|
|
|
|
|
|
|
|
Current accident year
loss ratio
|
|
62.4
%
|
|
|
72.6 %
|
|
(10.2)
|
Prior accident years
loss ratio
|
|
(7.4)%
|
|
|
(10.8)%
|
|
3.4
|
Loss ratio
|
|
55.1
%
|
|
|
61.8 %
|
|
(6.7)
|
Expense
ratio
|
|
35.3
%
|
|
|
36.0 %
|
|
(0.7)
|
Combined
ratio
|
|
90.3
%
|
|
|
97.7 %
|
|
(7.4)
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio catastrophe impact (3)
|
|
3.0
%
|
|
|
3.1 %
|
|
(0.1)
|
Current accident year
loss ratio COVID-19 impact (3)
|
|
—
%
|
|
|
6.4 %
|
|
(6.4)
|
Prior accident years
loss ratio COVID-19 impact (3)
|
|
0.2
%
|
|
|
— %
|
|
0.2
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio, excluding COVID-19 and catastrophes
|
|
59.4
%
|
|
|
63.1 %
|
|
(3.7)
|
Combined ratio,
excluding COVID-19 and current year catastrophes
|
|
87.1
%
|
|
|
88.3 %
|
|
(1.2)
|
|
(1) Gross premium
volume excludes $3.0 billion and $2.1 billion for the
years ended December 31, 2021 and 2020,
respectively,
of written
premiums attributable to our program services business and other
fronting arrangements that were ceded.
|
(2) Amounts may
not reconcile due to rounding.
|
(3) The point
impact of catastrophes and COVID-19 is calculated as the associated
net losses and loss adjustment expenses
divided by total
earned premiums.
|
Premiums
The increase in gross premium volume in our underwriting
operations in 2021 was driven by new business and more favorable
rates within our professional liability and general liability
product lines across both of our underwriting segments. Net
retention of gross premium volume for our underwriting operations
was 84% in 2021 compared to 83% in 2020. The increase in earned
premiums in our underwriting operations in 2021 was primarily
attributable to higher gross premium volume within our professional
liability and general liability product lines.
Combined Ratio
In 2021, underwriting results included $195.0 million of net losses and loss
adjustment expenses attributed to natural catastrophes, including
Winter Storm Uri, the floods in
Europe and Hurricane Ida (2021
Catastrophes) as well as $15.7
million of net losses and loss adjustment expenses resulting
from an increase in our net estimate of ultimate losses and loss
adjustment expenses attributed to COVID-19. In 2020, underwriting
results included $358.3 million of
net losses and loss adjustment expenses attributed to COVID-19 and
$172.2 million of net losses and loss
adjustment expenses from natural catastrophes, including Hurricanes
Laura, Sally and Isaias, as well as the derecho in Iowa and wildfires in the western U.S. (2020
Catastrophes). Excluding losses attributed to catastrophes and
COVID-19, the decrease in our consolidated combined ratio in 2021
compared to 2020 was driven by a lower current accident year loss
ratio within our Insurance segment, partially offset by the impact
of less favorable development on prior accident years loss reserves
in 2021 compared to 2020. Higher earned premiums in 2021 compared
to 2020 had a favorable impact on our expense ratio and an
unfavorable impact on the prior accident years loss ratio.
The net losses and loss adjustment expenses attributed to the
2021 Catastrophes as of December 31,
2021 represent our best estimates based upon information
currently available. Our estimates for these losses are based on
claims received to date, detailed policy and reinsurance contract
level reviews, preliminary industry loss estimates and output from
both industry and proprietary models, as well as analysis of our
ceded reinsurance contracts. These estimates are based on various
assumptions about coverage, liability and reinsurance and are
subject to change. While we believe our reserves for the 2021
Catastrophes as of December 31, 2021
are adequate, we continue to closely monitor reported claims and
may adjust our estimates of gross and net losses as new information
becomes available.
Insurance Segment
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2021
|
|
2020
|
|
% Change
|
Gross premium
volume
|
$
|
7,239,676
|
|
$
|
6,029,024
|
|
20 %
|
Net written
premiums
|
$
|
5,998,890
|
|
$
|
4,977,662
|
|
21 %
|
Earned
premiums
|
$
|
5,465,284
|
|
$
|
4,688,448
|
|
17 %
|
Underwriting
profit
|
$
|
696,413
|
|
$
|
169,001
|
|
312 %
|
|
|
|
|
|
|
|
|
Underwriting
Ratios (1)
|
|
|
|
|
|
|
Point
Change
|
Loss ratio
|
|
|
|
|
|
|
|
Current accident year
loss ratio
|
|
60.6
%
|
|
|
71.9%
|
|
(11.3)
|
Prior accident years
loss ratio
|
|
(9.3)%
|
|
|
(11.8)%
|
|
2.5
|
Loss ratio
|
|
51.3
%
|
|
|
60.1 %
|
|
(8.8)
|
Expense
ratio
|
|
35.9
%
|
|
|
36.3 %
|
|
(0.4)
|
Combined
ratio
|
|
87.3
%
|
|
|
96.4 %
|
|
(9.1)
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio catastrophe impact (2)
|
|
1.7
%
|
|
|
2.7 %
|
|
(1.0)
|
Current accident year
loss ratio COVID-19 impact (2)
|
|
— %
|
|
|
6.3 %
|
|
(6.3)
|
Prior accident years
loss ratio COVID-19 impact (2)
|
|
(0.1)%
|
|
|
— %
|
|
(0.1)
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio, excluding COVID-19 and catastrophes
|
|
58.9
%
|
|
|
63.0 %
|
|
(4.1)
|
Combined ratio,
excluding COVID-19 and current year catastrophes
|
|
85.6
%
|
|
|
87.4 %
|
|
(1.8)
|
|
|
|
(1) Amounts may
not reconcile due to rounding.
|
(2) The point
impact of catastrophes and COVID-19 is calculated as the associated
net losses and loss adjustment expenses divided by
total earned
premiums.
|
Premiums
The increase in gross premium volume in our Insurance segment in
2021 was driven by growth across all of our product lines, most
notably within our professional liability and general liability
product lines, which experienced higher new business volume and
benefited from more favorable rates and higher retention of
renewals. Additionally, our personal lines product lines
experienced significant growth in 2021 primarily attributable to
the continued expansion of our classic cars business. Net retention
of gross premium volume was 83% in both 2021 and 2020. The increase
in earned premiums in 2021 was primarily due to the higher gross
premium volume.
Combined Ratio
The Insurance segment's current accident year losses and loss
adjustment expenses in 2021 included $94.7 million of net losses and loss
adjustment expenses from the 2021 Catastrophes. Current accident
year losses in 2020 included $296.4
million and $124.4 million of
net losses and loss adjustment expenses attributed to COVID-19 and
the 2020 Catastrophes, respectively. Excluding losses attributed to
catastrophes and COVID-19, the decrease in the current accident
year loss ratio in 2021 compared to 2020 was primarily attributable
to lower attritional loss ratios within our professional liability,
general liability and property product lines, primarily due to the
benefit of achieving higher premium rates.
The Insurance segment's 2021 combined ratio included
$506.3 million of favorable
development on prior accident years loss reserves compared to
$554.6 million in 2020. The decrease
in favorable development was primarily due to less favorable
development on our professional liability product lines in 2021
compared to 2020, partially offset by more favorable development on
our property product lines in 2021 compared to 2020. Additionally,
higher earned premiums in 2021 compared to 2020 had an unfavorable
impact on the prior accident years loss ratio. In 2021 and 2020,
favorable development was most significant on our general
liability, workers' compensation, marine and energy and
professional liability product lines. In 2021, we also had
significant favorable development on our property product
lines.
The modest decrease in the Insurance segment's expense ratio in
2021 was primarily due to the favorable impact of higher earned
premiums, partially offset by higher profit sharing expenses in
2021 compared to 2020 as a result of improved profitability.
Reinsurance Segment
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2021
|
|
2020
|
|
% Change
|
Gross premium
volume
|
$
1,246,143
|
|
$
1,130,923
|
|
10 %
|
Net written
premiums
|
$
1,126,167
|
|
$
960,123
|
|
17 %
|
Earned
premiums
|
$
1,042,048
|
|
$
929,348
|
|
12 %
|
Underwriting
loss
|
$
(55,238)
|
|
$
(34,009)
|
|
(62)%
|
|
|
|
|
|
|
Underwriting
Ratios (1)
|
|
|
|
|
Point
Change
|
Loss ratio
|
|
|
|
|
|
Current accident year
loss ratio
|
72.0
%
|
|
75.3 %
|
|
(3.3)
|
Prior accident years
loss ratio
|
1.9
%
|
|
(5.6)%
|
|
7.5
|
Loss ratio
|
73.9
%
|
|
69.8 %
|
|
4.1
|
Expense
ratio
|
31.4
%
|
|
33.9 %
|
|
(2.5)
|
Combined
ratio
|
105.3
%
|
|
103.7 %
|
|
1.6
|
|
|
|
|
|
|
Current accident year
loss ratio catastrophe impact (2) (3)
|
9.6
%
|
|
5.1 %
|
|
4.5
|
Current accident year
loss ratio COVID-19 impact (2)
|
— %
|
|
6.7 %
|
|
(6.7)
|
Prior accident years
loss ratio COVID-19 impact (2)
|
2.1
%
|
|
— %
|
|
2.1
|
|
|
|
|
|
|
Current accident year
loss ratio, excluding COVID-19 and catastrophes
|
62.3
%
|
|
63.5 %
|
|
(1.2)
|
Combined ratio,
excluding COVID-19 and current year catastrophes
|
93.6
%
|
|
91.9 %
|
|
1.7
|
|
(1) Amounts may
not reconcile due to rounding.
|
(2) The point
impact of catastrophes and COVID-19 is calculated as the associated
net losses and loss adjustment expenses
divided by total earned
premiums.
|
(3) The point
impact of catastrophes does not include the favorable impact of
assumed reinstatement premiums associated with
the 2021
Catastrophes of $21.7 million for the year ended December 31,
2021. Reinstatement premiums were not significant
for the year ended
December 31, 2020.
|
Premiums
The increase in gross premium volume in our Reinsurance segment
in 2021 was primarily attributable to new business and increases on
renewals within our professional liability and general liability
product lines, including favorable premium adjustments within our
professional liability product lines, partially offset by lower
gross premiums within our property product lines. The increases on
renewals and favorable premium adjustments were primarily due to
increased exposures arising from growth in underlying portfolios
and more favorable rates. Significant variability in gross premium
volume can be expected in our Reinsurance segment due to
individually significant contracts and multi-year contracts.
Lower gross premiums within our property product lines in 2021
were primarily attributable to non-renewals following our decision
to discontinue writing property reinsurance business on a
risk-bearing basis effective January 1,
2021. We continued to have property loss exposure throughout
2021, including catastrophe exposure, on property treaties written
in prior years with contract terms that extended beyond
January 1, 2021 and on our
retrocessional reinsurance property business, which we discontinued
writing effective January 1, 2022.
With few exceptions, effective January 1,
2022, we no longer have exposure to reinsurance and
retrocessional reinsurance property risks within our Reinsurance
segment.
Net retention of gross premium volume was 90% in 2021 compared
to 85% in 2020. The increase in net retention was driven by changes
in mix of business. Our growing professional liability and general
liability product lines are fully retained while the non-renewed
property business had a lower retention rate than the rest of the
segment.
The increase in earned premiums in 2021 was primarily
attributable to growth in gross premium volume within our general
liability and professional liability product lines in recent years,
partially offset by the impact of lower gross premiums within our
property product lines as a result of our decision to discontinue
writing property reinsurance business, as previously discussed.
Combined Ratio
The Reinsurance segment's current accident year losses and loss
adjustment expenses in 2021 included $100.3
million of net losses and loss adjustment expenses
attributed to the 2021 Catastrophes. Partially offsetting the
impact of losses attributed to the 2021 Catastrophes was
$21.7 million of favorable
reinstatement premiums in 2021 attributed to these events. Current
accident year losses in 2020 included $61.9
million and $47.8 million of
net losses and loss adjustment expenses attributed to COVID-19 and
the 2020 Catastrophes, respectively. Catastrophe losses and
reinstatement premiums in 2021 were primarily attributed to our
retrocessional reinsurance property business, a portion of which
was ceded to Lodgepine Re effective July 1,
2021, and our property reinsurance product lines, both of
which we have discontinued writing on a risk-bearing basis, as
previously discussed. Catastrophe losses in 2020, and a portion of
our 2020 COVID-19 losses, were also attributed to our property
reinsurance product lines. Excluding the impact of catastrophes and
COVID-19, the decrease in the current accident year loss ratio was
driven by our professional liability and general liability product
lines. These product lines benefited from higher premium rates and
an increase in the proportion of quota share contract structures
within our portfolio, which generally have lower loss ratios than
excess of loss contracts. The favorable impact of changes in these
product lines on the current accident year loss ratio was partially
offset by an unfavorable impact from the change in mix of business
within the segment as the non-renewed property business had a lower
attritional loss ratio than the rest of the segment.
The Reinsurance segment's 2021 combined ratio included
$19.9 million of adverse
development on prior accident years loss reserves, which was
primarily attributable to our property product lines, as well as
additional exposures recognized on prior accident years related to
net favorable premium adjustments on our professional liability
product lines. Adverse development on our property product lines
was primarily attributable to an increase in reserves attributed to
COVID-19, reflecting changes in our net estimates resulting from
updated and new loss information from cedents. We also had net
adverse development within our property product lines on natural
catastrophes that occurred in recent years, however, this adverse
development was largely offset by favorable development on natural
catastrophes within other product lines in the Reinsurance segment.
In 2021, the increase in prior years loss reserves on our property
and professional liability product lines was also partially offset
by favorable development on our general liability and credit and
surety product lines. In 2020, the combined ratio included
$51.8 million of favorable
development on prior accident years loss reserves, which reflected
favorable development on our property product lines, partially
offset by adverse development on our public entity and professional
liability product lines and additional exposures recognized on
prior accident years related to net favorable premium adjustments
on our professional liability product lines.
The decrease in the Reinsurance segment's expense ratio in 2021
was primarily attributable to lower compensation and general
expenses due to the discontinuation of our property reinsurance
business as well as the favorable impact of higher earned premiums
in 2021 compared to 2020.
Investing Results
We measure investing results by our net investment income, net
investment gains and the change in net unrealized gains on
available-for-sale investments, as well as investment yield and
taxable equivalent total investment return. The following table
summarizes our investment performance.
|
Years Ended
December 31,
|
(dollars in
thousands)
|
2021
|
|
2020
|
|
Change
|
Net investment
income
|
$
374,601
|
|
$
371,830
|
|
1 %
|
Net investment
gains
|
$
1,978,534
|
|
$
617,979
|
|
$
1,360,555
|
Change in net
unrealized gains on available-for-sale investments
(1)
|
$
(450,096)
|
|
$
442,089
|
|
$
(892,185)
|
Investment yield
(2) (3)
|
2.0
%
|
|
2.4 %
|
|
(0.4)
|
Taxable equivalent
total investment return (3)
|
8.8
%
|
|
9.4 %
|
|
(0.6)
|
|
(1) The change in
net unrealized gains on available-for-sale investments included an
increase related to an adjustment
to our life
and annuity benefit reserves of $63.0 million for the year
ended December 31, 2021 and a decrease related
to an adjustment
to our life and annuity benefit reserves of $68.2 million for the
year ended December 31, 2020.
|
(2) Investment
yield reflects net investment income as a percentage of monthly
average invested assets at amortized cost.
|
(3) See
Supplemental Financial Information for a reconciliation of
investment yield to taxable equivalent total investment
return.
|
The increase in net investment income in 2021 was driven by
higher dividend income in 2021 and income on our equity method
investments in 2021 compared to losses in 2020. This increase was
partially offset by lower interest income on our short-term
investments due to lower short-term interest rates in 2021 compared
to 2020.
Net investment gains in both 2021 and 2020 were primarily
attributable to an increase in the fair value of our equity
securities driven by favorable market value movements. Net
investment gains in 2020 reflected significant market volatility
experienced during the year. The impact of significant declines in
the fair value of our equity securities in the first quarter of
2020, driven by unfavorable market value movements resulting from
the onset of the COVID-19 pandemic, were more than offset by
increases in the fair value of our equity securities over the
subsequent three quarters of 2020.
The decrease in net unrealized gains on available-for-sale
investments in 2021 was attributable to decreases in the fair value
of our fixed maturity securities as a result of an increase in
interest rates during 2021. The increase in net unrealized gains on
available-for-sale investments in 2020 was attributable to
increases in the fair value of our fixed maturity securities as a
result of a decrease in interest rates during 2020.
Markel Ventures
Our Markel Ventures segment includes a diverse portfolio of
businesses from different industries that offer various types of
products and services to businesses and consumers. In August 2021, we acquired a controlling interest
in Buckner HeavyLift Cranes (Buckner), a provider of crane rental services
for large commercial contractors. In December 2021, we acquired a controlling interest
in Metromont LLC (Metromont), a precast concrete manufacturer and
concrete building solutions provider for commercial projects. Due
to the one-month lag in consolidating the results of Markel
Ventures, the results of Metromont will be included in our
consolidated results beginning in January
2022. The following table summarizes the results from our
Markel Ventures segment.
|
Years Ended December 31,
|
(dollars in
thousands)
|
2021
|
|
2020
|
|
Change
|
Operating
revenues
|
$
3,643,827
|
|
$
2,794,959
|
|
30 %
|
Operating income
(1)
|
$
272,552
|
|
$
254,078
|
|
7 %
|
EBITDA
(1)
|
$
402,700
|
|
$
366,934
|
|
10 %
|
Net income to
shareholders
|
$
174,407
|
|
$
145,449
|
|
20 %
|
|
(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 2021 was driven by an
increase of $638.9 million from our
construction services businesses primarily due to an increased
contribution from Lansing Building Products, LLC (Lansing), which was acquired in April 2020, and the contribution from
Buckner in the fourth quarter of
2021, as well as improved pricing and increased demand in 2021
compared to 2020. Additionally, operating revenues in 2021
increased across our transportation-related and equipment
manufacturing businesses, due in part to lower sales volumes at
most of these businesses in 2020 as a result of the economic and
social disruption caused by the COVID-19 pandemic, and in our
consumer and building products businesses, given increased demand
reflecting increases in consumer spending in 2021. These increases
in operating revenues were partially offset by lower operating
revenues from our healthcare businesses due to the sale of certain
subsidiaries of one of these businesses in January 2021.
The benefit of increases in operating revenues to operating
income, EBITDA and net income to shareholders in 2021 was reduced
by increased costs of goods sold across many of our businesses,
which are reflective of current economic conditions where supply
constraints are contributing to increasing wholesale prices,
particularly for raw materials, across a variety of industries.
The increase in operating income, EBITDA and net income to
shareholders in 2021 was driven by higher revenues at our
construction services businesses, as previously discussed. The
increase was also attributable to a pre-tax transaction gain of
$22.0 million, which was included in
services and other expenses and recognized in connection with the
sale of certain subsidiaries at one of our healthcare businesses,
as previously discussed, as well as other associated changes in
this business. These increases were partially offset by the impact
of lower revenues and operating margins at one of our consulting
services businesses in 2021 as well as a $17.2 million pre-tax increase in our estimate of
the contingent consideration obligations related to better than
expected financial performance of certain of our recent
acquisitions.
Other Operations
The following table presents the components of operating
revenues and operating expenses that are not included in a
reportable segment.
|
Years Ended December
31,
|
|
2021
|
|
2020
|
(dollars in
thousands)
|
Services and
other revenues
|
|
Services and
other expenses
|
|
Amortization of
intangible assets
|
|
Services and
other revenues
|
|
Services and
other expenses
|
|
Amortization of
intangible assets
|
Other
operations:
|
|
|
|
|
|
|
|
|
|
|
|
Insurance-linked
securities
|
$
202,019
|
|
$
186,510
|
|
$
38,448
|
|
$
200,928
|
|
$
168,118
|
|
$
38,447
|
Program services and
other fronting
|
125,716
|
|
20,132
|
|
20,938
|
|
104,171
|
|
20,427
|
|
20,937
|
Life and
annuity
|
1,515
|
|
16,667
|
|
—
|
|
1,233
|
|
17,713
|
|
—
|
Other
(1)
|
17,195
|
|
30,534
|
|
2,403
|
|
32,006
|
|
81,251
|
|
5,453
|
|
346,445
|
|
253,843
|
|
61,789
|
|
338,338
|
|
287,509
|
|
64,837
|
Underwriting
operations (2)
|
|
|
|
|
41,182
|
|
|
|
|
|
41,906
|
Total
|
$
346,445
|
|
$
253,843
|
|
$
102,971
|
|
$
338,338
|
|
$
287,509
|
|
$
106,743
|
|
(1) Other includes
the results of our run-off Lodgepine and Markel CATCo operations
for both periods presented. For the year ended December 31, 2020,
services and
other
expenses included a legal settlement at our Markel CATCo
operations.
|
(2) Amortization
of intangible assets attributable to our underwriting operations is
not allocated between the Insurance and Reinsurance
segments.
|
Insurance-Linked Securities
The increase in operating revenues in our Nephila
insurance-linked securities operations in 2021 was driven by growth
in our managing general agent operations, partially offset by lower
investment management fees. The decrease in investment management
fees was primarily due to higher management fees in 2020
attributable to releases of capital from side pocket reserves,
which were more significant in 2020 than 2021, as well as lower
average assets under management during 2021. Nephila's net assets
under management were $8.8 billion
and $9.6 billion as of December 31, 2021 and 2020, respectively.
Program Services and Other Fronting
The increase in operating revenues and operating income in our
program services and other fronting operations in 2021 was
primarily due to higher gross premium volume at our program
services operations driven by the expansion of existing programs,
as well as growth from new programs. Gross premiums in our program
services operations were $2.7 billion
and $2.1 billion for the years ended
December 31, 2021 and 2020,
respectively.
Income Taxes
The effective tax rate was 22% in 2021 compared to 17% in 2020.
The effective tax rate for 2020 differs from the effective tax rate
in 2021, and the statutory rate of 21%, primarily due to a tax
benefit that was recognized in 2020 for accumulated losses on
certain investments we sold that were not previously
deductible.
Financial Condition
Investments, cash and cash equivalents and restricted cash and
cash equivalents (invested assets) were $28.3 billion at December 31, 2021 compared
to $24.9 billion at December 31,
2020. The increase was primarily attributable to cash provided by
operating activities of $2.3 billion,
as well as an increase in the fair value of our equity securities,
driven by favorable market value movements. Net cash provided by
operating activities increased from $1.7
billion in 2020, primarily due to higher net premium
collections, partially offset by higher claims settlement activity,
as a result of continued growth in premium volume within our
Insurance segment.
At December 31, 2021, our holding company held $5.3 billion of invested assets compared to
$4.1 billion of invested assets at
December 31, 2020. The increase in holding company invested
assets was primarily due to dividends received from our
subsidiaries, net proceeds from our May
2021 debt offering and an increase in the fair value of
equity securities, partially offset by cash used in connection with
the acquisition of Metromont and to repurchase outstanding shares
of our common stock.
Investment in Hagerty
We hold an investment in Hagerty, Inc. (Hagerty), an automotive
enthusiast brand offering integrated membership products and
programs as well as a specialty insurance provider focused on the
global automotive enthusiast market. Hagerty became a publicly
traded company in December 2021 and
in conjunction raised additional capital through a private
offering, which included an additional $30.0
million investment by us. Following these transactions, our
ownership interest in Hagerty is 23% and is comprised of Class A
common shares, which are listed for trading on the New York Stock
Exchange, as well as Class V common shares, associated with our
original investment in 2019, that can be converted on a one-for-one
basis into Class A common shares.
For accounting purposes, we are deemed to have the ability to
exercise significant influence over Hagerty and are therefore
required to account for our investment in Hagerty under the equity
method, rather than at fair value. As of December 31, 2021, the carrying value of our
investment in Hagerty was $256.6
million, which was included within other assets on the
consolidated balance sheet. As of December
31, 2021, the estimated value of our investment, based on
the closing stock price of Hagerty's Class A common shares, was
$1.1 billion.
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 Overview," "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our 2020 Annual Report on
Form 10-K, or our most recent Quarterly Report on Form 10-Q, or are
included in the items listed below:
- current global economic, market and industry conditions, as
well as significant volatility, uncertainty and disruption caused
by the COVID-19 pandemic, including governmental, legislative,
judicial or regulatory actions or developments affecting our
businesses;
- our expectations about future results of our underwriting,
investing, Markel Ventures and other operations are based on
current knowledge and assume no significant man-made or natural
catastrophes, no significant changes in products or personnel and
no adverse changes in market conditions;
- the effect of cyclical trends 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, increased expenditures);
- the frequency and severity of man-made and natural catastrophes
(including earthquakes, wildfires and weather-related catastrophes)
may exceed expectations, are unpredictable and, in the case of
wildfires and weather-related catastrophes, may be exacerbated if,
as many forecast, changing conditions in the climate, oceans and
atmosphere result in increased hurricane, flood, drought or other
adverse weather-related activity;
- 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 environmental 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 inherent 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 increases in our estimated loss reserves for such
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 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 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 and 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 that health epidemics and pandemics, including the
COVID-19 pandemic, as well as actions of local, state and federal
authorities in response thereto, may have on our business
operations and claims activity;
- 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 cyber-attack on, enterprise
information technology systems that we use or a failure to comply
with data protection or privacy regulations;
- outsourced 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 executive officer or other key
personnel 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;
- the political, legal, regulatory, financial, tax and general
economic impacts, and other impacts we cannot anticipate, related
to the United Kingdom's withdrawal
from the European Union (Brexit), which could have adverse
consequences for our businesses, particularly our London-based international insurance
operations;
- our ability to obtain additional capital for our operations on
terms favorable to us;
- our compliance, or failure to comply, with covenants and other
requirements under our revolving credit facility, 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;
- investor litigation or disputes, as well as regulatory
inquiries, investigations or proceedings, including the inquiry by
the Bermuda Monetary Authority, related to our Markel CATCo operations; delays or disruptions
in the run-off of those operations; or the inability to complete,
or failure to realize the benefits of, the proposed transaction
that would allow the accelerated return of capital to our
Markel CATCo investors, including
due to the failure to obtain requisite approvals or satisfaction of
other conditions on the proposed terms and schedule; 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 speak only as at their dates.
Our previously announced conference call, which will involve
discussion of our quarterly and year-end financial results and
business developments and may include forward-looking information,
will be held Thursday, February 3,
2022, beginning at 9:30 a.m. (Eastern
Time). Investors, analysts and the general public may listen
to the call free over the Internet through Markel Corporation's
website at www.markel.com in the "For investors" section. Any
person needing additional information can contact Markel's Investor
Relations Department at IR@markel.com. A replay of the call also
will be available on our website from approximately one hour after
the conclusion of the call until Monday,
February 14, 2022.
* * * * * * * *
About Markel Corporation
Markel Corporation is a diverse financial holding company
serving a variety of niche markets. The Company's principal
business markets and underwrites specialty insurance products. In
each of the Company's businesses, it seeks to provide quality
products and excellent customer service so that it can be a market
leader. The financial goals of the Company are to earn consistent
underwriting and operating profits and superior investment returns
to build shareholder value. Visit Markel Corporation on the web at
www.markel.com.
Markel Corporation
and Subsidiaries
Consolidated
Statements of Income and Comprehensive Income
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
(dollars in
thousands, except per share data)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Earned
premiums
|
$
1,806,797
|
|
$
1,526,894
|
|
$
6,503,029
|
|
$
5,612,205
|
Net investment
income
|
90,506
|
|
97,588
|
|
374,601
|
|
371,830
|
Net investment
gains
|
802,743
|
|
848,875
|
|
1,978,534
|
|
617,979
|
Products
revenues
|
384,976
|
|
321,734
|
|
1,712,120
|
|
1,439,515
|
Services and other
revenues
|
673,083
|
|
560,559
|
|
2,278,141
|
|
1,693,537
|
Total Operating
Revenues
|
3,758,105
|
|
3,355,650
|
|
12,846,425
|
|
9,735,066
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Losses and loss
adjustment expenses
|
938,091
|
|
814,150
|
|
3,581,205
|
|
3,466,961
|
Underwriting,
acquisition and insurance expenses
|
648,876
|
|
540,278
|
|
2,293,739
|
|
2,017,627
|
Products
expenses
|
371,371
|
|
281,234
|
|
1,544,506
|
|
1,256,159
|
Services and other
expenses
|
580,593
|
|
536,387
|
|
2,022,935
|
|
1,561,120
|
Amortization of
intangible assets
|
41,989
|
|
39,039
|
|
160,539
|
|
159,315
|
Total Operating
Expenses
|
2,580,920
|
|
2,211,088
|
|
9,602,924
|
|
8,461,182
|
Operating
Income
|
1,177,185
|
|
1,144,562
|
|
3,243,501
|
|
1,273,884
|
Interest
expense
|
(48,167)
|
|
(44,381)
|
|
(183,579)
|
|
(177,582)
|
Net foreign exchange
gains (losses)
|
10,594
|
|
(87,117)
|
|
72,271
|
|
(95,853)
|
Income Before Income
Taxes
|
1,139,612
|
|
1,013,064
|
|
3,132,193
|
|
1,000,449
|
Income tax
expense
|
(264,560)
|
|
(165,635)
|
|
(684,458)
|
|
(168,682)
|
Net Income
|
875,052
|
|
847,429
|
|
2,447,735
|
|
831,767
|
Net income
attributable to noncontrolling interests
|
(3,923)
|
|
(130)
|
|
(22,732)
|
|
(15,737)
|
Net Income to
Shareholders
|
871,129
|
|
847,299
|
|
2,425,003
|
|
816,030
|
Preferred stock
dividends
|
(18,000)
|
|
(18,400)
|
|
(36,000)
|
|
(18,400)
|
Net Income to Common
Shareholders
|
$
853,129
|
|
$
828,899
|
|
$
2,389,003
|
|
$
797,630
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS)
|
|
|
|
|
|
|
|
Change in net
unrealized gains on available-for-sale investments, net of
taxes:
|
|
|
|
|
|
|
|
Net holding gains
(losses) arising during the period
|
$
(85,636)
|
|
$
54,672
|
|
$
(348,315)
|
|
$
356,159
|
Reclassification
adjustments for net gains (losses) included in net
income
|
(2,816)
|
|
174
|
|
(6,623)
|
|
(3,386)
|
Change in net
unrealized gains on available-for-sale investments, net of
taxes
|
(88,452)
|
|
54,846
|
|
(354,938)
|
|
352,773
|
Change in foreign
currency translation adjustments, net of taxes
|
117
|
|
38,230
|
|
(213)
|
|
29,847
|
Change in net
actuarial pension loss, net of taxes
|
6,558
|
|
(8,420)
|
|
8,390
|
|
(6,998)
|
Total Other
Comprehensive Income (Loss)
|
(81,777)
|
|
84,656
|
|
(346,761)
|
|
375,622
|
Comprehensive
Income
|
793,275
|
|
932,085
|
|
2,100,974
|
|
1,207,389
|
Comprehensive income
attributable to noncontrolling interests
|
(3,918)
|
|
(124)
|
|
(22,730)
|
|
(15,755)
|
Comprehensive Income
to Shareholders
|
$
789,357
|
|
$
931,961
|
|
$
2,078,244
|
|
$
1,191,634
|
|
|
|
|
|
|
|
|
NET INCOME PER COMMON
SHARE
|
|
|
|
|
|
|
|
Basic
|
$
62.65
|
|
$
59.44
|
|
$
176.92
|
|
$
55.67
|
Diluted
|
$
62.44
|
|
$
59.33
|
|
$
176.51
|
|
$
55.63
|
Markel Corporation
and Subsidiaries
Selected
Data
|
|
|
December
31,
|
(in thousands,
except per share data)
|
2021
|
|
2020
|
Total investments,
cash and cash equivalents and restricted cash and cash
equivalents
|
$
28,292,167
|
|
$
24,926,592
|
Reinsurance
recoverables
|
7,293,555
|
|
5,989,337
|
Goodwill and
intangible assets
|
4,271,626
|
|
4,387,342
|
Total
assets
|
48,448,866
|
|
41,710,054
|
Unpaid losses and
loss adjustment expenses
|
18,178,894
|
|
16,222,376
|
Unearned
premiums
|
5,383,619
|
|
4,433,245
|
Senior long-term debt
and other debt
|
4,361,266
|
|
3,484,023
|
Total shareholders'
equity
|
14,695,048
|
|
12,799,789
|
Book value per common
share outstanding
|
$
1,034.56
|
|
$
885.72
|
Common shares
outstanding
|
13,632
|
|
13,783
|
Markel Corporation
and Subsidiaries
Supplemental
Financial Information
|
|
Components of
Consolidated Operating Income
Segment
Results
|
|
|
Quarter Ended
December 31, 2021
|
(dollars in
thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel
Ventures
|
|
Other
(1)
|
|
Consolidated
|
Gross premium
volume
|
$
1,880,383
|
|
$
253,508
|
|
$
—
|
|
$
—
|
|
$
647,324
|
|
$
2,781,215
|
Net written
premiums
|
1,571,589
|
|
233,085
|
|
—
|
|
—
|
|
(2,274)
|
|
1,802,400
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned
premiums
|
1,536,460
|
|
272,017
|
|
—
|
|
—
|
|
(1,680)
|
|
1,806,797
|
Losses and loss
adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident
year
|
(863,151)
|
|
(188,589)
|
|
—
|
|
—
|
|
—
|
|
(1,051,740)
|
Prior accident
years
|
108,569
|
|
14,176
|
|
—
|
|
—
|
|
(9,096)
|
|
113,649
|
Underwriting,
acquisition and insurance expenses
|
(554,475)
|
|
(94,170)
|
|
—
|
|
—
|
|
(231)
|
|
(648,876)
|
Underwriting profit
(loss)
|
227,403
|
|
3,434
|
|
—
|
|
—
|
|
(11,007)
|
|
219,830
|
Net investment
income
|
—
|
|
—
|
|
90,503
|
|
3
|
|
—
|
|
90,506
|
Net investment
gains
|
—
|
|
—
|
|
802,743
|
|
—
|
|
—
|
|
802,743
|
Products
revenues
|
—
|
|
—
|
|
—
|
|
384,976
|
|
—
|
|
384,976
|
Services and other
revenues
|
—
|
|
—
|
|
—
|
|
568,555
|
|
104,528
|
|
673,083
|
Products
expenses
|
—
|
|
—
|
|
—
|
|
(371,371)
|
|
—
|
|
(371,371)
|
Services and other
expenses
|
—
|
|
—
|
|
—
|
|
(508,244)
|
|
(72,349)
|
|
(580,593)
|
Amortization of
intangible assets (2)
|
—
|
|
—
|
|
—
|
|
(16,464)
|
|
(25,525)
|
|
(41,989)
|
Operating income
(loss)
|
$
227,403
|
|
$
3,434
|
|
$
893,246
|
|
$
57,455
|
|
$
(4,353)
|
|
$
1,177,185
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio
|
85
%
|
|
99
%
|
|
|
|
|
|
NM
(3)
|
|
88
%
|
|
|
Quarter Ended
December 31, 2020
|
(dollars in
thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel
Ventures
|
|
Other
(1)
|
|
Consolidated
|
Gross premium
volume
|
$
1,546,875
|
|
$
172,394
|
|
$
—
|
|
$
—
|
|
$
578,646
|
|
$
2,297,915
|
Net written
premiums
|
1,293,895
|
|
139,550
|
|
—
|
|
—
|
|
(1,356)
|
|
1,432,089
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned
premiums
|
1,287,688
|
|
240,464
|
|
—
|
|
—
|
|
(1,258)
|
|
1,526,894
|
Losses and loss
adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident
year
|
(819,075)
|
|
(166,022)
|
|
—
|
|
—
|
|
—
|
|
(985,097)
|
Prior accident
years
|
149,937
|
|
22,706
|
|
—
|
|
—
|
|
(1,696)
|
|
170,947
|
Underwriting,
acquisition and insurance expenses
|
(453,208)
|
|
(87,072)
|
|
—
|
|
—
|
|
2
|
|
(540,278)
|
Underwriting profit
(loss)
|
165,342
|
|
10,076
|
|
—
|
|
—
|
|
(2,952)
|
|
172,466
|
Net investment
income
|
—
|
|
—
|
|
97,585
|
|
3
|
|
—
|
|
97,588
|
Net investment
gains
|
—
|
|
—
|
|
848,875
|
|
—
|
|
—
|
|
848,875
|
Products
revenues
|
—
|
|
—
|
|
—
|
|
321,734
|
|
—
|
|
321,734
|
Services and other
revenues
|
—
|
|
—
|
|
—
|
|
459,730
|
|
100,829
|
|
560,559
|
Products
expenses
|
—
|
|
—
|
|
—
|
|
(281,234)
|
|
—
|
|
(281,234)
|
Services and other
expenses
|
—
|
|
(41,461)
|
|
—
|
|
(433,648)
|
|
(61,278)
|
|
(536,387)
|
Amortization of
intangible assets (2)
|
—
|
|
—
|
|
—
|
|
(13,273)
|
|
(25,766)
|
|
(39,039)
|
Operating income
(loss)
|
$
165,342
|
|
$
(31,385)
|
|
$
946,460
|
|
$
53,312
|
|
$
10,833
|
|
$
1,144,562
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio
|
87 %
|
|
96 %
|
|
|
|
|
|
NM
(3)
|
|
89 %
|
|
(1)
Other represents the total profit (loss) attributable to our
operations that are not included in a reportable segment as well as
any amortization of intangible assets that is not
allocated
to a
reportable segment. Amortization of intangible assets attributable
to our underwriting segments is not allocated between the Insurance
and Reinsurance segments and is therefore
included in
Other.
|
(2)
Segment profit for the Markel Ventures segment includes
amortization of intangible assets attributable to Markel Ventures.
Amortization of intangible assets attributable to our
underwriting
segments is
not allocated between the Insurance and Reinsurance segments and is
therefore included in Other.
|
(3) NM
- Ratio is not meaningful
|
|
Year Ended
December 31, 2021
|
(dollars in
thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel
Ventures
|
|
Other
(1)
|
|
Consolidated
|
Gross premium
volume
|
$
7,239,676
|
|
$
1,246,143
|
|
$
—
|
|
$
—
|
|
$
2,952,863
|
|
$
11,438,682
|
Net written
premiums
|
5,998,890
|
|
1,126,167
|
|
—
|
|
—
|
|
(5,326)
|
|
7,119,731
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned
premiums
|
5,465,284
|
|
1,042,048
|
|
—
|
|
—
|
|
(4,303)
|
|
6,503,029
|
Losses and loss
adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident
year
|
(3,311,185)
|
|
(749,815)
|
|
—
|
|
—
|
|
—
|
|
(4,061,000)
|
Prior accident
years
|
506,292
|
|
(19,928)
|
|
—
|
|
—
|
|
(6,569)
|
|
479,795
|
Underwriting,
acquisition and insurance expenses
|
(1,963,978)
|
|
(327,543)
|
|
—
|
|
—
|
|
(2,218)
|
|
(2,293,739)
|
Underwriting profit
(loss)
|
696,413
|
|
(55,238)
|
|
—
|
|
—
|
|
(13,090)
|
|
628,085
|
Net investment
income
|
—
|
|
—
|
|
374,590
|
|
11
|
|
—
|
|
374,601
|
Net investment
gains
|
—
|
|
—
|
|
1,978,534
|
|
—
|
|
—
|
|
1,978,534
|
Products
revenues
|
—
|
|
—
|
|
—
|
|
1,712,120
|
|
—
|
|
1,712,120
|
Services and other
revenues
|
—
|
|
—
|
|
—
|
|
1,931,696
|
|
346,445
|
|
2,278,141
|
Products
expenses
|
—
|
|
—
|
|
—
|
|
(1,544,506)
|
|
—
|
|
(1,544,506)
|
Services and other
expenses
|
—
|
|
109
|
|
—
|
|
(1,769,201)
|
|
(253,843)
|
|
(2,022,935)
|
Amortization of
intangible assets (2)
|
—
|
|
—
|
|
—
|
|
(57,568)
|
|
(102,971)
|
|
(160,539)
|
Operating income
(loss)
|
$
696,413
|
|
$
(55,129)
|
|
$
2,353,124
|
|
$
272,552
|
|
$
(23,459)
|
|
$
3,243,501
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio
|
87
%
|
|
105
%
|
|
|
|
|
|
NM
(3)
|
|
90
%
|
|
|
Year Ended
December 31, 2020
|
(dollars in
thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel
Ventures
|
|
Other
(1)
|
|
Consolidated
|
Gross premium
volume
|
$
6,029,024
|
|
$
1,130,923
|
|
$
—
|
|
$
—
|
|
$
2,106,718
|
|
$
9,266,665
|
Net written
premiums
|
4,977,662
|
|
960,123
|
|
—
|
|
—
|
|
(5,547)
|
|
5,932,238
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned
premiums
|
4,688,448
|
|
929,348
|
|
—
|
|
—
|
|
(5,591)
|
|
5,612,205
|
Losses and loss
adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident
year
|
(3,373,085)
|
|
(700,240)
|
|
—
|
|
—
|
|
—
|
|
(4,073,325)
|
Prior accident
years
|
554,586
|
|
51,755
|
|
—
|
|
—
|
|
23
|
|
606,364
|
Underwriting,
acquisition and insurance expenses
|
(1,700,948)
|
|
(314,872)
|
|
—
|
|
—
|
|
(1,807)
|
|
(2,017,627)
|
Underwriting profit
(loss)
|
169,001
|
|
(34,009)
|
|
—
|
|
—
|
|
(7,375)
|
|
127,617
|
Net investment
income
|
—
|
|
—
|
|
371,585
|
|
245
|
|
—
|
|
371,830
|
Net investment
gains
|
—
|
|
—
|
|
617,979
|
|
—
|
|
—
|
|
617,979
|
Products
revenues
|
—
|
|
—
|
|
—
|
|
1,439,515
|
|
—
|
|
1,439,515
|
Services and other
revenues
|
—
|
|
—
|
|
—
|
|
1,355,199
|
|
338,338
|
|
1,693,537
|
Products
expenses
|
—
|
|
—
|
|
—
|
|
(1,256,159)
|
|
—
|
|
(1,256,159)
|
Services and other
expenses
|
—
|
|
(41,461)
|
|
—
|
|
(1,232,150)
|
|
(287,509)
|
|
(1,561,120)
|
Amortization of
intangible assets (2)
|
—
|
|
—
|
|
—
|
|
(52,572)
|
|
(106,743)
|
|
(159,315)
|
Operating income
(loss)
|
$
169,001
|
|
$
(75,470)
|
|
$
989,564
|
|
$
254,078
|
|
$
(63,289)
|
|
$
1,273,884
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio
|
96 %
|
|
104 %
|
|
|
|
|
|
NM
(3)
|
|
98 %
|
|
(1)
Other represents the total profit (loss) attributable to our
operations that are not included in a reportable segment as well as
any amortization of intangible assets that is not allocated to
a
reportable
segment. Amortization of intangible assets attributable to our
underwriting segments is not allocated between the Insurance and
Reinsurance segments and is therefore included in Other.
|
(2)
Segment profit for the Markel Ventures segment includes
amortization of intangible assets attributable to Markel Ventures.
Amortization of intangible assets attributable to our underwriting
segments
is not
allocated between the Insurance and Reinsurance segments and is
therefore included in Other.
|
(3) NM
- Ratio is not meaningful
|
Underwriting
Results
Components of
Quarter-to-Date Combined Ratio
|
|
|
Quarters Ended
December 31,
|
|
2021
|
|
2020
|
|
Insurance
|
|
Reinsurance
|
|
Consolidated
|
|
Insurance
|
|
Reinsurance
|
|
Consolidated
|
Underwriting
Ratios (1)
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio
|
56.2
%
|
|
69.3
%
|
|
58.2
%
|
|
63.6 %
|
|
69.0 %
|
|
64.5%
|
Prior accident years
loss ratio
|
(7.1)%
|
|
(5.2)%
|
|
(6.3)%
|
|
(11.6)%
|
|
(9.4)%
|
|
(11.2)%
|
Loss ratio
|
49.1
%
|
|
64.1
%
|
|
51.9
%
|
|
52.0 %
|
|
59.6 %
|
|
53.3 %
|
Expense
ratio
|
36.1
%
|
|
34.6
%
|
|
35.9
%
|
|
35.2 %
|
|
36.2 %
|
|
35.4 %
|
Combined
ratio
|
85.2
%
|
|
98.7
%
|
|
87.8
%
|
|
87.2 %
|
|
95.8 %
|
|
88.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio catastrophe impact (2)
|
0.4
%
|
|
2.5
%
|
|
0.7
%
|
|
4.5 %
|
|
5.3 %
|
|
4.6 %
|
Current accident year
loss ratio COVID-19 impact (2)
|
—
%
|
|
— %
|
|
— %
|
|
(0.7)%
|
|
(1.9)%
|
|
(0.9)%
|
Prior accident years
loss ratio COVID-19 impact (2)
|
(0.1)
%
|
|
1.0
%
|
|
— %
|
|
— %
|
|
— %
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year
loss ratio, excluding COVID-19 and catastrophes
|
55.8
%
|
|
66.8
%
|
|
57.5
%
|
|
59.8 %
|
|
65.7 %
|
|
60.8 %
|
Combined ratio,
excluding COVID-19 and current year catastrophes
|
85.0
%
|
|
95.2
%
|
|
87.1
%
|
|
83.4 %
|
|
92.5 %
|
|
85.0 %
|
|
(1) Amounts may
not reconcile due to rounding.
|
(2) The point
impact of catastrophes and COVID-19 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)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income to common
shareholders
|
$
853,129
|
|
$
828,899
|
|
$
2,389,003
|
|
$
797,630
|
Adjustment of
redeemable noncontrolling interests
|
5,321
|
|
(8,024)
|
|
46,874
|
|
(28,705)
|
Adjusted net income
to common shareholders
|
$
858,450
|
|
$
820,875
|
|
$
2,435,877
|
|
$
768,925
|
|
|
|
|
|
|
|
|
Basic common shares
outstanding
|
13,702
|
|
13,811
|
|
13,768
|
|
13,811
|
Dilutive potential
common shares from restricted stock units and restricted
stock
|
47
|
|
24
|
|
32
|
|
12
|
Diluted common shares
outstanding
|
13,749
|
|
13,835
|
|
13,800
|
|
13,823
|
Basic net income per
common share
|
$
62.65
|
|
$
59.44
|
|
$
176.92
|
|
$
55.67
|
Diluted net income
per common share
|
$
62.44
|
|
$
59.33
|
|
$
176.51
|
|
$
55.63
|
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. We also exclude losses and loss adjustment expenses
attributed to certain significant, infrequent loss events, for
example, the COVID-19 pandemic. Due to the unique characteristics
of a catastrophe loss, there is inherent variability as to the
timing or loss amount, which cannot be predicted in advance. The
same is true for the COVID-19 pandemic, as there are no events in
recent history with characteristics similar to COVID-19. We believe
measures that exclude the effects of catastrophe events and
COVID-19 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 2020,
the COVID-19 pandemic, for the reasons previously discussed. The
current accident year loss ratio excluding the impact of
catastrophes and 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
"Underwriting Results".
Investing
We evaluate our investment performance by analyzing taxable
equivalent total investment return, which is a non-GAAP financial
measure. Taxable equivalent total investment return includes items
that impact net income, such as coupon interest on fixed maturity
securities, changes in fair value of equity securities, dividends
on equity securities and realized investment gains or losses on
available-for-sale securities, as well as changes in unrealized
gains or losses on available-for-sale securities, which do not
impact net income. Certain items that are included in net
investment income have been excluded from the calculation of
taxable equivalent total investment return, such as amortization
and accretion of premiums and discounts on our fixed maturity
portfolio, to provide a comparable basis for measuring our
investment return against industry investment returns. The
calculation of taxable equivalent total investment return also
includes the current tax benefit associated with income on certain
investments that is either taxed at a lower rate than the statutory
income tax rate or is not fully included in U.S. taxable income. We
believe the taxable equivalent total investment return is a better
reflection of the economics of our decision to invest in certain
asset classes. We focus on our long-term investment return,
understanding that the level of investment gains or losses may vary
from one period to the next.
The following table reconciles investment yield to taxable
equivalent total investment return.
|
Years Ended December
31,
|
|
2021
|
|
2020
|
Investment yield
(1)
|
2.0
%
|
|
2.4 %
|
Adjustment of
investment yield from amortized cost to fair value
|
(0.6)%
|
|
(0.5)%
|
Net amortization of
net premium on fixed maturity securities
|
0.4
%
|
|
0.4 %
|
Net investment gains
and change in net unrealized investment gains on available-for-sale
securities
|
5.9
%
|
|
5.8 %
|
Taxable equivalent
effect for interest and dividends (2)
|
0.1
%
|
|
0.1 %
|
Other
(3)
|
1.0
%
|
|
1.2 %
|
Taxable equivalent
total investment return
|
8.8
%
|
|
9.4 %
|
|
(1) Investment
yield reflects net investment income as a percentage of monthly
average invested assets at amortized cost.
|
(2) Adjustment to
tax-exempt interest and dividend income to reflect a taxable
equivalent basis.
|
(3) Adjustment to
reflect the impact of time-weighting the inputs to the calculation
of taxable equivalent total investment return.
|
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 revenues,
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)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Markel Ventures
operating income
|
$
57,455
|
|
$
53,312
|
|
$
272,552
|
|
$
254,078
|
Depreciation
expense
|
24,898
|
|
16,813
|
|
72,580
|
|
60,284
|
Amortization of
intangible assets
|
16,464
|
|
13,273
|
|
57,568
|
|
52,572
|
Markel Ventures
EBITDA
|
$
98,817
|
|
$
83,398
|
|
$
402,700
|
|
$
366,934
|
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SOURCE Markel Corporation