Markel Corporation reported $54.7 million for its third-quarter net income, down 13.4 percent from one year ago when the specialty insurer posted $63.2 million.
The insurer’s result was hurt by increased catastrophe losses. The company was also adversely affected by losses from programs now in run-off.
The insurer said its 2011 underwriting results have been impacted by both increased frequency of natural catastrophes and continued soft market conditions. The company said it is pleased with the premium volume generated by insurance acquisitions and the growth of non-insurance operations.
The excess and surplus lines segment’gross written premium for the quarter was $237 million, a 1 percent decrease from last year. This reduction was primarily due to the loss of two large programs, president and co-chief operating officer Richie Whitt said during the earnings call on Tuesday, Nov. 8.
The specialty division generated gross written premium of $154 million during the quarter, an increase of about $50 million from last year.
Workers’ comp unit FirstComp’s premiums totaled $60 million. The premium shrinkage in other areas was due to corrective actions in accident and health divisions, and non-renewing underperforming books of business, the company said.
Markel International recorded gross written premium of $194 million for the quarter.
Year-to-date, the divisions generated gross written premium of $432 million, a 65 percent boost from last year. The increase was due to the FirstComp acquisition, Whitt said.
The combined ratio was 100 percent for the third quarter, up from 93 percent last year. The combined ratio included $34 million or 7 points of underwriting loss related to natural catastrophes. It also included $33 million or 8 point of underwriting loss on two programs now in run-off that were exposed to losses associated with the residential mortgage market.
The insurer’s earned premiums for the quarter rose to $509 million, up from $435 million one year ago. The net investment income came in at $62 million, down from $68 million.
Workers’ Comp Rates Firming
Tom Gayner, president and chief investment officer, also commented on the competitive landscape in the workers’ comp market. When asked by an analyst during the conference call about the firming that’s been seen in terms of rates, he noted that, “Yes, things are starting to happen in workers’ comp. I wouldn’t call it a dramatic change. But certainly, in some of the more distressed markets, particularly California, rates seem to be going the other way.”
“In some of the other states, maybe it’s more of a flattening of rates. But certainly things appear to be a little bit ahead of the rest of the market in workers’ comp. There certainly appears to be a movement afoot,” he said.
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