New accounting standards hit Markel’s Q1 2018 figures

Markel Corporation, which has operations in Bermuda, has reported that it made a loss of $174.8 million for the first quarter of 2018, a fall from the profit of $223.2 million for the same quarter of 2017.

The company said that this net loss was unfavourably impacted by the adoption of ASU No. 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Liabilities, effective January 1, 2018. As required by the new accounting standard, the company recognised a pre-tax loss of $122.1 million ($101.3 million net of taxes) as a result of the decline in the fair value of its equity securities since December 31, 2017. Prior to the adoption of ASU No. 2016-01, changes in the fair value of the Company's equity securities were included in other comprehensive income on an after-tax basis.

The combined ratio for the first three months of 2018 was 90 percent, an improvement on the 100 percent combined ratio it reported for the first quarter of 2017.

Additionally, the net loss for the quarter ended March 31, 2018 included a pre-tax foreign currency loss of $22.1 million ($17.5 million net of taxes) and a non-recurring tax expense of $99.5 million.

“Our underwriting results for the quarter were solid and reflect profitable growth from recent acquisitions as well as our continued focus on underwriting discipline,” commented Richard R. Whitt and Thomas S. Gayner, co-chief executive officers. “Comprehensive loss to shareholders and book value per share were impacted by declines in both our fixed income and equity portfolios, driven by an increase in interest rates and unfavourable movements in the equity markets during the period. However, we continue to maintain a long-term focus with our investment strategy. Contributions from our Markel Ventures operations reflect both organic growth and the recent acquisition of Costa Farms.”