Markel returned to profit in 2023 after a loss making 2022.
The insurer reported comprehensive income of US$2.3 billion for the year (2022: US$1.2 billion loss). Earned premiums rose 9% year-on-year, at US$8.3 billion for 2023 compared to US$7.6 billion for 2022.
"We enjoyed excellent returns in 2023 from Markel Ventures, our investment operations, and many portions of our insurance business," said Thomas S. Gayner, Markel CEO. "While we remain focused on some areas of improvement for our insurance operations, our three-engine system continues to drive profitable growth.
“Strong operating cash flows from each of our insurance, investments, and Markel Ventures engines can now be reinvested to continue growing shareholder value."
Markel’s segment saw operating revenue of US$7.3 billion (2022: US$6.5 billion). Reinsurance operating revenue was down 5%, at US$1 billion (2022: US$1.1 billion).
Markel’s program services, insurance-linked securities (ILS) and other insurance segment saw operating revenue slide 43%, at US$280 million in 2023 (2022: US$494 million).
Gross premium volume for the year was US$10.3 billion (2022: US$9.8 billion). The increase was driven by “more favorable” rates and new business growth, particularly within personal lines and property, Markel said in its results report.
|
(in thousands, except per share amounts) |
2023 |
2022 |
|
|
Earned premiums |
US$8,295,479 |
US$7,587,792 |
|
|
Markel Ventures operating revenues |
US$4,985,081 |
US$4,757,527 |
|
|
Net investment income |
US$734,532 |
US$446,755 |
|
|
Net investment gains (losses) |
US$1,524,054 |
US$(1,595,733) |
|
|
Comprehensive income (loss) to shareholders |
US$2,285,344 |
US$(1,205,779) |
|
|
Diluted net income (loss) per common share |
US$146.98 |
US$(23.72) |
|
|
Combined ratio |
98 % |
92 % |
Source: Markel
Markel saw its underwriting profit slide 79% for the year, at US$132.8 million (2022: US$626.6 million). The combined ratio was 98.4%, a deterioration on 91.7% in 2022.
The insurer saw US$40.1 million of net losses and loss adjustment expenses (LAE) from the Hawaiian wildfires and Hurricane Idalia. Its 2022 underwriting results had included US$81.9 million of net losses and LAE from Hurricane Ian and the Russia-Ukraine conflict.
“Excluding these losses, the increase in our consolidated combined ratio in 2023 compared to 2022 was primarily driven by a higher attritional loss ratio across both our underwriting segments,” the insurer stated in the annual report.
Markel additionally flagged losses on intellectual property collateral protection insurance written within its professional liability product line due to “higher than anticipated levels of claims and loss experience”.
Included in this, the insurer booked US$65 million of credit losses in connection with Vesttoo affiliate fraudulent letters of credit as reinsurance collateral on two policies, which Markel said it believes “represents our full exposure to credit losses on the related reinsurance recoverables.”
“We are actively pursuing remedies to make recoveries on the reinsurance recoverables impacted by the fraudulent letters of credit and do not have any other ceded reinsurance contracts with Vesttoo Ltd. or its affiliates,” Markel said in the report.
In the fourth quarter of 2023, Markel undertook a reserve study on “selected” general liability and professional liability products lines, resulting in increases to its prior accident year loss reserves.
The insurer flagged its casualty construction business, which it said has “grown meaningfully” in recent years.
“Within our excess and umbrella general liability and risk-managed errors and omissions professional liability books, we determined that there was a greater than expected propensity for limits below our attachment point to erode, pushing more claims into our layers,” the insurer said. “Further, reporting of these claims has lagged historical loss development patterns due to the effect of court closures and claims backlogs arising from the COVID-19 pandemic, in addition to aggressive tactics by the plaintiffs' bar and delayed claims reporting trends.
“Although we have achieved significant rate increases since 2019 on many of these lines in response to heightened loss trends, the findings of our study led us to increase our loss development factors and therefore our estimate of the ultimate loss ratios on our primary casualty contractors' liability, excess and umbrella general liability and risk-managed errors and omissions professional liability product lines.”
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