Markel Corp. (NYSE:MKL) Q2 2020 Earnings Conference Call - Final Transcript
Jul 29, 2020 • 09:30 am ET
[Operator instructions] Our first question is from Mark Hughes from SunTrust. Go ahead.
The ILS business could you give us a sense of your outlook there in terms of assets and this overall activity?
Yeah Mark, Richie here. I think the outlook is positive. I think we commented on the call last quarter that as of the COVID-19 situation was unfolding as markets were becoming incredibly volatile, I think this people's decisions on asset allocation I think they were basically frozen.
As things have rebounded as there's been little more calm in the markets, we have definitely seen an uptick in terms of conversations. People are getting more comfortable with doing their due diligence virtually as opposed to on-site and so we're very hopeful that we will see additional mandates in terms of AUM in the second half of the year. So very -- feels very different today than it did back in March-April.
And then in the insurance operation the GL you described as a very good growth opportunity. There's been I think you've expressed concerns about the social inflation, but you seem to be writing a lot of business and you had a favorable development in the quarter. Is social inflation as much of an issue now in the GL line?
Again COVID-19 has changed just about every aspect of life and I think we still have to get some time to see how COVID-19 impacts social inflation, but there's no doubt we were seeing social inflation before COVID started. I think there were probably some aspect of social inflation going on. How that plays out I don't know, but given the level of rate increase, we'll given where our portfolio was and giving the level of rate increases we're now seeing, I feel pretty comfortable that that is running ahead of social -- whatever we would be seeing in terms of social inflation.
And then finally on Workers Comp there has been discussion of maybe that stabilizing at some point in the near future here. How do you see that?
Well, we were seeing some green shoots in May and June, but obviously we had hotspots developing, we had some states considering and in some cases going backwards in terms of opening up. So I think we have to see what impact that has on the Workers Comp line.
What we've seen so far in terms of Workers Comp is the impact the COVID-19 on the top line i.e. premium and people either canceling policies or premium being returned, that impact is looking much bigger than the impact on the loss line i.e. paying for COVID-19 claims. So our Workers Comp has held up reasonably well, but I think it's going to face headwinds until the COVID-19 situation is better under control.
How about pricing there in comp?
Pricing has been down for several quarters because just the results have been so good in Workers Comp. I think the pressure on pricing is moderating. It is probably still