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

Nov 02, 2016 • 09:30 am ET

Previous

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

Share
Close

Loading Event

Loading Transcript

Presentation
Executive
Anne Waleski

impacted by unfavorable developments on our medical malpractice and specified medical product lines, our year-to-date results are in line with our expectations.

Growth in book value was driven by strong performance in our investment portfolio, and Markel Ventures continues to add significant value through organic growth and the inclusion of CapTech in 2016.

Now let's talk about our results for the first nine months of 2016. Total operating revenues grew 6% to approximately $4.2 billion in 2016 from $3.9 billion in 2015. The increase is driven by roughly 15% increase in revenue from Markel Ventures, which is primarily due to our acquisition of CapTech in the fourth quarter of 2015 and higher sales volume from one of our transportation-related businesses.

Taking a look at our underwriting results, gross premium volume for the nine months ended September 30, 2016 increased 3% compared to the same period of 2015. The increase is attributable to the US Insurance segment and Reinsurance segment, partially offset by lower gross premium volume in our International Insurance segment.

As we discussed in previous calls, the increased volume in the US Insurance segment is due in part to closing our underwriting systems one week later in 2016 as compared to the same period a year ago. Excluding the impact of this timing difference, we've also seen higher volume in 2016 as compared to 2015 within our personal and general liability lines of business. The increase in the Reinsurance segment was due to new business and to the favorable timing of renewals of multi-year policies in our general liability and property lines in 2016.

The decrease in volume for the International Insurance segment was due to unfavorable movements in foreign currency rates of exchange as well as lower premium volume within our marine and energy and credit and surety product lines.

Market conditions remained very competitive. Consistent with our historical practices, we will not write business when we believe prevailing market rates will not support our underwriting profit targets.

Net written premiums for the first nine months of 2016 were $3.2 billion 5% from the prior year, due to increases in gross volume is just discuss as well as an increase in net retention to 83% in 2016, compared to 82% last year.

The increase in net retention for the nine months ended September 30 2016 was driven by higher retention within the US insurance segment and the reinsurance segment, largely due to changes in the business.

Earn premiums were flat for the first nine months of 2016 as compared to the same period of 2015. Our consolidated combined ratio for the nine months ended September 30 2016, was in 93%, compared to an 89% last year.

The increase in the combined ratio was driven by less favorable development or prior year loss reserves partially offset by lower for an excellent year loss ratio in 2016 compared to 2015. For the first nine months of 2016, prior year redundancies were $339 million compared to $459 million for the same