Markel posts solid Q1 profit driven by ‘three engines’

A big swing in net investment income and net investment gains and losses pushed Markel into a solid profit in the first quarter of 2023, a period in which Markel Ventures also performed strongly and contributed to the positive result.

The company posted a net profit of $646 million in Q1, a big turnaround on the $511 million loss it made a year earlier, though its CEO encouraged investors to view the company’s performance across a longer duration.

Its net investment income improved to reach $159 million in Q1 compared with $92 million a year earlier. Its net investment gains and losses were $372 million, compared with a loss of $358 million a year earlier, which reflected an increase in the fair value of its equity portfolio resulting from favourable market value movements.

Its earned premiums increased to $1.9 billion, solid growth on the $1.7 billion it posted the year before, which its said reflecting growth in gross premium volume in recent periods across many product lines.

Its insurance unit’s gross written premiums increased to $2 billion from $1.9 billion and its reinsurance GWP shrank slightly to $552 million compared with $576 million a year earlier.

The group’s combined ratio was 94%, a deterioration on the 89% it reported in Q1 2022. It said this was primarily due to a higher attritional loss ratio and the impact of less favourable development on prior accident years loss reserves in 2023 compared to 2022.

Markel Ventures increased its operating revenues to $1.1 billion compared with $950 million. The operating income of this unit grew 46%.

“The first quarter of 2023 saw all three engines – insurance, investments and Markel Ventures – meaningfully contribute to our strong operating results,” said Thomas Gayner (pictured), CEO. “Markel Ventures achieved impressive organic revenue and profitability growth. In insurance, we continue to grow while maintaining our decades long approach to disciplined underwriting. Our investment income continues to benefit from higher interest rates, and we experienced favourable returns in our equity portfolio.

“As always, we encourage investors to focus on our operating performance over the long term, where our three-engine system continues to demonstrate strength, durability and profitable growth. I give my thanks to all the associates of Markel for their constant pursuit of excellence, and serving customers as we continue our daily pursuit to build one of the world’s great companies.”