Markel’s 2016 Saw Investment Income Gains, Higher Cat Losses

Markel Corp. ended 2016 with a drop in net income and increase in the combined ratio, with Hurricane Matthew and the Canadian wildfires to blame for higher catastrophe losses. At the same time, the insurer experienced gains in premium and an upswing in investment income.

“Despite a competitive market, we believe these results demonstrate our commitment to underwriting discipline and to building long-term shareholder value,” Executive Chairman Alan Kirshner said in prepared remarks.

The insurer booked $132.7 million in net income during Q4, or $9.11 per share, compared to $197.9 million in the 2015 fourth quarter, or $14.14 per share. For all of 2016, Markel’s net income nearly hit $455.7 million, or $31.27 per share, versus $587.7 million, or $41.74 per share the previous year.

Markel’s consolidated combined ratio was 92 for 2016. Broken down, that number hit 93 for its U.S. Insurance division, 94 for International Insurance, and 87 for Reinsurance. In 2015, those numbers were 89, 89, 86 and 90, respectively. The insurer said the increase in its consolidated combined ratio came from less favorable development in prior years’ loss reserves compared to 2015.

Markel added that $22.1 million of underwriting losses stemming from the Canadian wildfires, and $46.6 million of Hurricane Matthew-related underwriting losses contribut4d two points to the consolidated combined ratio for 2016.

Net investment income came in at nearly $93.9 million in the 2016 fourth quarter, a jump from $82.7 million over the same period a year before. For all of 2016 that number reached $373.2 million, compared to $353.2 million in 2015.

Here are some additional financial highlights:

• Consolidated net premiums earned were booked at $983 million in Q4, up from $958.6 million in the 2015 fourth quarter. For the year, net premiums earned were $3.86 billion, compared to $3.82 billion in 2015.

• Markel’s U.S. Insurance segment gross written premiums were $634.8 million for Q4 and $2.6 billion for all of 2016. The number was $2.6 billion for the year, compared to $2.5 billion in 2015.

• International Insurance gross written premiums reached $240.7 million in the quarter and $1.12 billion for 2016, versus $252.9 million in Q4 2015, and $1.16 billion for 2015.

• Reinsurance gross written premiums came in at $121 million during Q4 and $1 billion for all of 2016, versus $89.7 billion in the 2015 fourth quarter and $965.3 billion for all of 2015.

• Net written premium for Markel’s U.S. Insurance arm was $542.9 million for Q4 and $2.23 billion for all of 2016. In 2015, the number came in at $519.4 million for the fourth quarter and $2.1 billion for the 2015 calendar year.

• International Insurance produced $183.8 billion in net written premiums for the fourth quarter and $864.5 million for the 2016 calendar year. That compares to $187.5 million in the 2015 fourth quarter and $888.2 million in the 2015 calendar year.

• Reinsurance net written premiums were $112.2 million in Q4 and $898.7 in all of 2016. For 2015, they were $88.2 million in the fourth quarter and $824.3 million in the full year.

Source: Markel