Virginia-based Markel Corporation confirmed the estimates it gave on Oct. 22 that it would suffer a third quarter loss (see IJ Web site Oct. 23). It reported a net loss of $1.68 per diluted share for the quarter ended September 30, 2003 compared to net income of $0.88 per diluted share for the quarter ended September 30, 2002.
Nine-month net income, however, increased to $7.99 per diluted share compared to $4.97 per diluted share for the first nine months of 2002.
“The combined ratio was 110% and 101%, respectively, for the quarter and nine months ended September 30, 2003 compared to 110% and 105%, respectively for the quarter and nine months ended September 30, 2002,” said the bulletin.
Markel’s third quarter underwriting results reflect $55 million of reserve increases for asbestos and environmental loss exposures and $50 million of prior years’ loss reserve increases at the Company’s Investors Brokered Excess and Surplus Lines unit.
Chairman and CEO Alan Kirshner commented, “Our goal has always been to establish reserves that are more likely redundant than deficient and the increases during the quarter are consistent with that goal. However, we are disappointed that the reserve increases have overshadowed the outstanding underwriting performance of the balance of our business. We expect a strong finish to 2003 and are well positioned for 2004.”
The bulletin gave further details, noting that the Q3 loss from core operations was $1.19 per share in 2003 compared to loss from core operations of $0.66 per share for 2002. It said the increased loss “was primarily due to higher prior years’ loss reserve development in the Excess and Surplus Lines (E&S) segment partially offset by improved underwriting results for the Specialty Admitted and London Market segments.”
The first nine months result showed increased income from core operations. Markel posted income of $5.90 per share compared to income from core operations of $2.66 per share for the same period of 2002. “The improved results for the nine month period ended September 30, 2003 were primarily due to underwriting profitability in the E&S and Specialty Admitted segments as well as improving underwriting results in our London Insurance Market segment partially offset by higher development of prior years’ loss reserves in the Other segment compared to 2002,” said the bulletin.
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