US re/insurer Markel Corporation has reported a comprehensive loss of $1.31 billion for 2022 as unrealized losses in the company’s investment portfolio continued to weigh heavily on results.
However, underwriting profit remained stable for the year at $626.6 million on a combined ratio of 92%, including a return to profitability for the reinsurance segment, which reported underwriting profit of $83.9 million.
Markel also grew its top line considerably over the year, with net written premiums up 15% across its operations, including a 17% increase in primary insurance lines and a 4% increase for reinsurance.
There were, however, some non-renewals within its property reinsurance lines and the non-renewal of a large treaty within our workers’ compensation product line.
But these were largely offset by the impact of new business, primarily within its general liability and professional liability product lines, and more favourable premium adjustments within its credit and surety product lines.
Markel also discontinued writing property retrocessional reinsurance in 2022 and property reinsurance in 2021, which resulted in a $123.3 million reduction in gross premium volume in 2022 compared to 2021.
Overall underwriting results included $46.2 million of losses from Hurricane Ian, including a $23.8 million reduction from Markel’s initial estimate, as well as $35.7 million of losses from the conflict between Russia and Ukraine.
On investment results, Markel explained that the large downturn from net gains of $1.98 billion to net losses of $1.60 billion was attributable to decreases in the fair value of its fixed maturity and equity portfolios as a result of increases in interest rates and unfavourable market value movements in 2022. Net investment income nevertheless increased by 22% to $446.7 million for the year.
“Our 2022 results reflect the strength and balance of our three-engine architecture of insurance, investments, and Markel Ventures. Each engine delivered strong operating performance this year, generating an impressive $2.7 billion of operating cash flows,” said Thomas S. Gayner, Chief Executive Officer.
“Our insurance engine alone produced over $8 billion in revenues with the underwriting, ILS, and program services platforms each contributing positively to the bottom line. Our underwriting operations delivered a combined ratio in the low 90s, as a result of excellent premium growth as well as expense discipline, while navigating current economic realities and an evolving insurance market,” Gayner continued.
“Our investment income is starting to benefit from higher interest rates, which we expect to continue as we purchase higher yielding securities,” he added.
“Declines in the fair value of our equity and bond portfolios during the year represent unrealized losses that weighed heavily on our comprehensive income and book value in 2022, however, our focus, as always, is on long-term investment performance. We understand that periodic market volatility is to be expected and believe the long-term view is a better reflection of the quality of our portfolio.”
