Markel Corp. (NYSE:MKL) Q3 2016 Earnings Conference Call - Final Transcript

Thank you, Mr. Gayner. We will now begin the question-and-answer session. [Operator instructions] And your first question this morning will be from Jeff Schmitt of William Blair. Please go ahead.

Good morning, everyone. Looking at the US insurance business, it looks like the acting year ratio is up a bit. Not a lot, but maybe 60 basis points. I think you'd mentioned. You saw an uptick in frequency and severity and a couple lines, is that correct?

That's correct.

Are you seeing any changes on the litigation front that may be driving that? I mean, is there increased litigation or settlement sizes or anything you're seeing there?

No, I think it really, we one of the one of the strengths of our business, one of the beauties of our businesses, we have over 100 lines of business at Markel. And certainly, in some we've seen some frequency or severity, ie, the medical lines, but it's not across the board.

On the medical lines, you're seeing severity increase there in turn of what just the cost of underlying surgery?

Sure. Why don't we talk about that for a minute. In the medical lines, that's an area we've written for decades. One of the things that has been very interesting about medical over the years is it tends to move quickly. It can go from being really good to really bad fairly quickly. It can go from being really bad to really good fairly quickly. So it's a line of business that you have to stay on top of.

On top of that, there's been tremendous change, I think, as everybody's aware, in just how healthcare is being delivered. The smaller practices, the two, three, four doctors, they've been forming bigger practices, have been joining hospital groups. So the landscape has changed. We have definitely seen some change in frequency in the medical lines as well as some uptick in severity. That's really what we have been reacting to, particularly in the third quarter, trying to make sure we're on top of those trends that are going on in medical.

Okay. And then on the competitive environment, you spoke on a little bit. Are you seeing any change in terms and conditions? I mean, are they are they eroding here?,

I think like I said in my comments, things are, I would say, flat-ish right now. It's a competitive market. Last year and years before that you were seeing bigger decreases. Now I think things are relatively flat but still very competitive. I don't think people are drastically opening up coverage at this point. We seem like we've hit -- I don't know if it's an equilibrium point but we've certainly gotten close to it, it feels like.

Okay, thank you.

[Operator Instructions] The next question will come from Mark Dwelle of RBC Capital Markets. Please go ahead.

Just want to build a little bit more. You talked a little bit about the reserve edition in the medical lines. I guess it's surprising