Markel’s 2012 Q4 Profit Rises 13%; Full-Year Profit Up 78%

February 5, 2013

Markel Corp. reported 2012 fourth-quarter net profit to shareholders of $56.79 million, up 13.2 percent compared to $50.18 million reported in the fourth quarter of 2011.

For the full-year 2012, the Glen Allen, Va.-based specialty insurer’s net profit to shareholders was $253.39 million, up 78.4 percent from $142.03 million reported for the full-year 2011.

Net written premiums for the 2012 fourth quarter were $526.72 million, up from $467.46 million one year ago. For the full-year 2012, net written premiums were $2.214 billion, up from $2.041 billion for the full-year 2011.

The consolidated combined ratio for the 2012 fourth-quarter was 100 percent, compared to 95 percent one year ago. The consolidated combined ratio for the full-year 2012 was 97 percent, improving from 102 percent for the full-year 2011.

$107.4M of Underwriting Loss From Sandy

Markel stated that the decrease in the consolidated combined ratio was due to a lower current accident year loss ratio and more favorable development of prior years’ loss reserves — partially offset by a higher expense ratio compared to 2011. The 2012 combined ratio included $107.4 million, or five points, of underwriting loss from Sandy in the fourth quarter.

The 2012 combined ratio included $399.0 million of favorable development on prior years’ loss reserves compared to $354.0 million in 2011. The 2012 combined ratio also included $43.1 million — or two points — of underwriting, acquisition and insurance expenses related to the company’s prospective adoption of Financial Accounting Standards Board Accounting Standards Update No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts (ASU No. 2010-26).

Net investment income for the 2012 fourth quarter was $74.27 million, up from $67.12 million one year ago. For the full-year 2012, net investment income was $282.11 million, up from $263.67 million for the full-year 2011.

“We produced strong underwriting results in 2012 even with the impact of Hurricane Sandy in the fourth quarter,” CEO Alan Kirshner said in a statement. “In addition, we earned solid investment returns and total operating revenues for the year exceeded $3 billion as we continued to expand both our insurance and non-insurance operations through acquisitions and organic growth.”

Commenting on his company’s agreement to acquire Alterra Capital Holdings, which was first announced by the two companies last month, Kirshner said that “We believe the combination of Alterra with Markel will create a strong company in global specialty insurance and investments, with a demonstrated track record of underwriting discipline in niche market segments and proven asset management strengths that should benefit shareholders of both companies.”

 

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