Markel improves Q1 combined ratio to 89%

27-04-2022

Markel recorded a year-on-year improvement of five percentage points in its combined ratio for the first quarter of 2022, thanks partly to lower catastrophe losses, while its earned premiums increased by 17% compared with Q1 2021, on continued growth in gross premium volume from new business and more favourable rates.

Consolidated gross written premium (GWP) increased by 21% to $3.4 billion from $2.8 billion. GWP in its insurance business rose by 19% to $1.9 billion from $1.6 billion, and GWP in its reinsurance business was up by 8% to $576 million from $533 million.

Markel also achieved a combined ratio of 89%, which was five percentage points better than the 94% it recorded in the first quarter of last year, but it posted a net loss of nearly $50 million, compared with a net profit in Q1 2021 of almost $580 million.

The lower combined ratio was primarily due to a lower current accident year loss ratio as a result of lower catastrophe losses and a lower “attritional” loss ratio in 2022 compared to 2021. Markel explained.

The combined ratio for the first quarter of 2022 included $35 million, or two points, of net losses and loss adjustment expenses, as well as $12 million of additional reinsurance costs, attributed to the Russia-Ukraine conflict. The combined ratio for the first quarter of 2021 included $64 million, or four points, of net losses and loss adjustment expenses attributed to Winter Storm Uri.

Markel said net investment losses in 2022 reflected a decrease in the fair value of its equity portfolio driven by “unfavourable” market value movements.

"Our first-quarter results reflect continued progress against our underwriting initiatives as we grew our premium base through a combination of rate increases and new business opportunities and delivered an 89% combined ratio," Thomas Gayner and Richard Whitt, Markel’s co-CEOs, said in a statement to accompany the Q1 2022 results. "These results further demonstrate the effects of our ongoing focus on underwriting and expense discipline," they added.

They highlighted the Markel Ventures businesses, which grew revenues by an “impressive” 35% through a combination of strong organic growth and contributions from the company’s 2021 acquisitions.

Markel stressed that it generally uses five-year periods to measure its performance. For example, in the five years ending 31 March 2022, its compound annual growth in book value per common share was 10%.

Markel also announced it has filed its Form 10-Q for the first quarter of 2022 with the Securities and Exchange Commission.

Markel, financial results

Bermuda Re