Richmond, Va.-based specialty insurer Markel Corp. reported that its 2007 combined ratio was 88 percent compared to 87 percent in 2006.
Comprehensive income for 2007 was $337.0 million compared to $550.8 million in 2006.
Gross written premiums for the year decreased 7 percent compared to 2006. The decrease was primarily the result of increased competition across many product lines and the decision to exit certain programs underwritten by Markel Re’s SMART division.
Net investment income for the year was $306.5 million compared to $271.0 million in 2006. The increase in 2007 was due to having a larger investment portfolio compared to 2006.
The slight increase in the combined ratio was due to a higher expense ratio in 2007 compared to 2006, which was attributable to lower earned premiums in 2007.
The Excess and Surplus Lines segment’s combined ratio for the year was 82 percent compared to 78 percent in 2006. The increase was primarily due to a higher current accident year loss ratio than in 2006 resulting from price reductions in a softening insurance market and adverse loss experience during 2007 at the Markel Re unit, which experienced higher than expected average claim frequency and severity on programs within the Specialized Markel Alternative Risk Transfer (SMART) division. After non-renewing several SMART programs in 2007, the company decided in the first quarter of 2008 to combine the remaining SMART programs, as well as the excess and umbrella and the facultative reinsurance lines previously written by Markel Re, into two of our existing operating units, Markel Specialty Program Insurance and Markel Brokered Excess and Surplus Lines.
The Specialty Admitted segment’s combined ratio for the year was 92 percent compared to 91 percent in 2006. In 2007, a lower loss ratio was offset by a higher expense ratio as compared to 2006.
The London Insurance Market segment’s combined ratio was 93 percent compared to 100 percent in 2006.
Over the one- and five-year periods ended Dec. 31, 2007, Markel reported compound annual growth in book value per common share outstanding was 15 percent and 18 percent, respectively.
Book value per common share outstanding increased to $265.26 at Dec. 31, 2007 from $229.78 at Dec. 31, 2006.
The year 2007 was the second straight year of record net income for the insurer.
It reported diluted net income per share of $40.64 for the year ended Dec. 31, 2007 compared to diluted net income per share of $39.40 for 2006. The increase was due to higher investment returns and lower interest expense, partially offset by lower underwriting profits as compared to 2006.
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