Markel’s operating income up on investments but elevated losses drive reinsurance segment loss

Global re/insurer Markel Group Inc. has reported operating income of $1.4 billion and $3.1 billion for the third quarter and first nine months of 2024, respectively, and while overall the firm’s insurance engine performed well in both periods, elevated losses resulted in a reinsurance segment operating loss for the company.

Across the group, operating revenue growth of 37% and 15% for the quarter and nine months, respectively, as well as the aforementioned significant growth in operating income, was driven by the company’s investments engine.

Net investment income hit $233 million for the quarter and $671 million for 9M 2024, compared with $191 million and $519 million, respectively, in 2023. For the third quarter, net investment gains totalled $918 million, a huge turnaround from the losses of $267 million a year earlier, and for 9M 2024, investment gains hit $1.7 billion, up from $591 million in 9M 2023.

“Our Investments engine benefited from more favorable market value movements within our equity portfolio in 2024 compared to 2023,” explains Markel.

At the same time, Markel’s underwriting operations, with the exception of the reinsurance arm, performed well in both periods, producing overall insurance operating income of $145 million for the quarter and $458 million for 9M 2024, compared with $70 million and $445 million, respectively, in 2023.

Within the primary insurance segment, which benefited from strong performance in international operations, the favorable impact of underwriting actions by the company’s U.S. operations, and continued growth in the program services business in 2024, operating income rose from $25 million in Q3 2023 to $110 million in Q3 2024, and from $256 million in 9M 2023 to $350 million in 9M 2024.

However, this was partially offset by an operating loss of $34 million in the reinsurance business in Q3 2024 and a loss of $20 million in 9M 2024, compared with a loss of $6 million in Q3 2023 and a profit of $34 million in 9M 2023.

Markel explains that the performance of its reinsurance business was negatively impacted by elevated levels of losses on certain product lines.

In its results announcement, there’s isn’t much detail on the level of catastrophe losses incurred, but Markel does reveal that during Q3 and 9M 2024, underwriting results included $62 million of net losses and loss adjustment expenses attributed to hurricane Helene, or three points and one point on the quarter-to-date and year-to-date consolidated combined ratio, respectively.

Despite this, the combined ratio strengthened from 99.1% in Q3 2023 to 96.4% in this year’s third quarter, and for the nine month period ended September 30th, 2024, improved to 95.1% from 95.4% a year earlier.

Other insurance operations also contributed to the solid group-wide underwriting result, generating income of $69 million and $128 million for the quarter and nine months, respectively, compared with $51 million and $155 million, respectively, in 2023.

Finally, and although down year-on-year, the Markel Ventures operation also performed strongly, with income of $107 million in the quarter and $388 million in 9M 2024.

All in all, Markel has produced comprehensive income of $1.3 billion for the third quarter of 2024, an impressive turnaround from the loss of $108 million witnessed in Q3 2023. For 9M 2024, comprehensive income rose to $2.5 billion from $1.1 billion a year earlier.

Tom Gayner, Markel’s Chief Executive Officer, commented: “We’ve consistently emphasized the value of our family of businesses that have found a home under the Markel Group umbrella. The results of 2024 so far underscore that benefit. Many of our businesses performed exceptionally, others made solid improvements where there was room for improvement, and a few faced slowdowns or challenges.

“Overall, we achieved strong results, and we’re confident in our long-term ability for that to continue to be the case.”

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