Markel Reports $52.3M Q4 Income, Down 63% From One Year Ago

Markel Corporation reported $52.3 million for its 2011 fourth-quarter net income, down 62.8 percent from one year ago when the specialty insurer posted $140.4 million.

For the 2011 full-year, Markel posted net income of $148.5 million, down 44 percent from 2010 when it reported $267.7 million net income.

Net written premiums were the quarter came in at $467.5 million, up from $401.2 million during the year-ago period. The 2011 full-year net written premiums were $2.0 billion, up from $1.8 billion in 2010.

The fourth-quarter combined ratio deteriorated to 95 percent, compared to 89 percent one year ago. The 2011 combined ratio was 102 percent, compared to 97 percent in 2010.

The 2011 combined ratio included $152.4 million, or eight points, of underwriting loss related to natural catastrophes. The 2011 underwriting loss related to natural catastrophes included losses from the Thai floods in the fourth quarter and losses from Hurricane Irene, U.S. tornadoes, Japanese earthquake and tsunami, Australian floods and New Zealand earthquakes that occurred during the first nine months of 2011.

“Our 2011 underwriting results were impacted by the higher than expected frequency of natural catastrophes including the floods in Thailand during the fourth quarter,” said CEO Alan Kirshner.

However, he added, “we continued to grow our business with strategic acquisitions in both our insurance and non-insurance operations. In the fourth quarter, we added Weldship to our portfolio of industrial and service companies owned by Markel Ventures and, in January 2012, we acquired THOMCO, a leading specialty insurance program administrator. We believe these and other recent acquisitions will help us achieve our goal to build long-term value for our shareholders.”

Looking at Markel’s business segments, the specialty admitted segment saw its 2011 full-year combined ratio deteriorate to 109 percent from 100 percent in 2010, and the London insurance market segment’s combined ratio deteriorated to 116 percent from 95 percent. But the excess and surplus lines segment’s combined ratio showed a significant improvement, falling to 86 percent 96 percent during the same period.

The excess and surplus lines segment’s 2011 combined ratio included $227.5 million of favorable development on prior years’ loss reserves compared to $159.0 million in 2010. The redundancies on prior years’ loss reserves experienced within excess and surplus lines in 2011 and 2010 were primarily on the professional and products liability and casualty programs, partly due to lower loss severity than originally anticipated.

The net investment income for the fourth quarter came in at $67.1 million, down 5.6 percent from the year-ago period. The 2011 full-year net investment income was $263.7 million, down 3.2 percent from 2010.