Combined ratio improves five points for Markel

Commercial insurer Markel Corp. experienced a five-point drop in its combined ratio in 2015, while earned premiums were essentially unchanged from 2014.

Glen Allen, Va.-based Markel released Wednesday its financial results for the last three months and full year of 2015. Gross written premiums dropped 4%, from $4.81 billion in 2014 to $4.63 billion in 2015. All figures are in United States dollars. At a constant rate of exchange, gross written premiums in 2015 would have been 2% lower than in 2014, Markel said. The insurer reported its combined ratio improved 5 points, from 95% in 2014 to 90% last year.

Markel’s target markets include commercial property, professional liability, equine-related risks, workers’ compensation, classic cars and marine, energy and environmental-related activities.

In Canada, Markel owns a managing general agent that was acquired in 2009. The MGA – formerly known Elliott Special Risks – has offices in Toronto, Montreal, Calgary and Vancouver. Its offerings include property, marine and environmental impairment liability. Markel’s other Canadian operations include All-Sport Insurance Marketing Ltd. of Vancouver, an MGA that provides commercial general liability coverage for sports organizations and participants, written by Markel Syndicate 3000, a Lloyd’s underwriter managed by Markel Syndicate Management Limited (MSM). In the Lloyd’s market, Markel provides primary and excess of loss property, casualty, excess liability, professional liability, equine, marine, energy and trade credit insurance.

Company-wide, Markel reported Wednesday its earned premiums were essentially unchanged, at $3.84 billion in 2014 and $3.82 billion last year. However they would have increased 2% at a constant exchange rate.

In U.S. insurance, the combined ratio improved 6 points, from 95% in 2014 to 89% in 2015, “due to more favorable development of prior years’ loss reserves and a lower expense ratio compared to 2014.”

Markel also had favourable development on prior years’ loss reserves in its global insurance division in 2015, primarily on its inland marine product line, “compared to adverse development in 2014.” The favourable development on prior years’ loss reserves in U.S. insurance last year “was most significant on our general liability product line and on our brokerage property and workers’ compensation product lines,” Markel said in a release.

“In 2014, the redundancies on prior years’ loss reserves were most significant on our general liability and professional liability product lines. Favorable development on our professional liability lines in 2014 was partially offset by adverse development on our architects and engineers product line.”

In international insurance, the combined ratio improved 7 points – from 93% in 2014 to 86% last year – “driven by more favorable development of prior years’ loss reserves, partially offset by a higher expense ratio.”

In reinsurance, Markel’s combined ratio improved six points – from 96% in 2014 to 90% last year – “driven by a lower current accident year loss ratio and more favorable development on prior years’ loss reserves.”

During the fourth quarter, Markel recorded net written premiums of $796 million in 2015, compared to $812 million in 2014. In the most recent quarter, net written premiums were: $519.4 million in U.S. insurance (up from $516.6 million in Q4 2014); $188 million in international insurance (down from $195 million in 2014); $88.2 million in reinsurance (down from $101 million in Q4 2014); and $727,000 in other insurance (discontinued lines), compared to negative $706,000 in Q4 2014.

Company-wide, Markel’s combined ratio improved one point, from 89% in Q4 2014 to 88% in the latest quarter. Broken down by segment, the combined for the three months ending Dec. 31 were: 87% in U.S. insurance (down from 90% in Q4 2014); 83% in international insurance (down from 86% in Q4 2014); and 83% in reinsurance (down from 93% in Q4 2014).

“2015 was a tremendous year for our underwriting operations, which made substantial contributions to profitability despite challenging market conditions,” Executive Chairman Allan Kirshner stated in a release.

Kirshner had also been CEO until Jan. 1, when the appointment of Thomas Gayner and Richard Whitt, as co-CEOs, took effect. In its 2014 annual report Markel reported that Kirshner – 79 at the time – had been on the board of directors since 1978 and chairman and CEO since 1986. Before Jan. 1, Gayner had been president and chief investment officer and Whitt had been co-president and chief operating officer. The other co-president and chief operating officer had been Michael Crowley, now Markel’s sole president.