Re/insurance holding company Markel Corporation saw its results return to profitability in 2019, as lower catastrophe losses and investment gains helped to boost its performance.
Markel recorded operating revenues of $9.53 billion over 2019, compared with $6.81 billion in 2018. Income (before tax) similarly improved to $2.26 billion, versus a loss of $7.86 million in the previous year.
Looking at underwriting results, Markel’s consolidated combined ratio improved to 94%, down from 98% in 2018.
The decrease was attributed to lower catastrophe losses this year, which amounted to $100.4 million, mostly driven by Hurricane Dorian and Typhoons Faxai and Hagibis.
For comparison, Markel incurred $287.3 million of underwriting losses in 2018 due to Hurricanes Florence and Michael, Typhoon Jebi, and the wildfires in California.
Excluding the impact of catastrophes, the combined ratio was flat compared to 2018, as higher earned premiums had a favourable impact on the expense ratio and an unfavourable effect on the prior accident years’ loss ratio.
However, Markel’s combined ratio continued to be weighed down by its reinsurance segment, which improved significantly from its 113% level in 2018, but remained unprofitable at 104%.
This included $64.8 million of favourable development on prior years’ loss reserves, partly due to more favourable development on prior year catastrophes.
But excluding the impact of catastrophes, the loss ratio in the reinsurance segment actually increased due to higher attritional losses on Markel’s property product lines following changes to its outwards property reinsurance treaty structures.
In 2019 Markel eliminated its proportional property reinsurance treaty and purchased additional excess of loss property and catastrophe reinsurance coverage. It also had higher attritional losses across most of its other product lines.
These unfavourable impacts on the current accident year loss ratio in 2019 were partially offset by net favourable premium adjustments in 2019, primarily on its professional liability product lines.
Gross premium volume in Markel’s underwriting segments increased by 11% in 2019, helped by both the insurance and reinsurance segments.
Gross premium volume in the reinsurance segment increased by 6%, driven by higher gross premiums in general liability product lines, higher premium volume in workers’ compensation, favourable premium adjustments on professional liability lines.
“Following continued growth in our insurance and Markel Ventures operations, 2019 was a record-setting year for Markel,” said Thomas S. Gayner and Richard R. Whitt, Co-Chief Executive Officers of Markel Corporation.
“Gross written premiums from our underwriting operations surpassed $6 billion, and we are excited about the synergies we are achieving between our underwriting and other insurance platforms,” they explained.
“Within our Markel Ventures operations, revenues surpassed $2 billion and we continued to expand through our fourth quarter acquisition of VSC Fire & Security. Gains on our investment portfolio were just under $2 billion, driving record comprehensive income and book value per share.”
“We are proud of what we accomplished in 2019 and want to thank our dedicated associates for their significant contributions, which support our aspiration to become one of the world’s great companies.”
