|
x
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2015
|
¨
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______
|
Virginia
|
|
54-1959284
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
|
|
|
|
|
Page Number
|
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|
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||
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|
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|
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||
|
|
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|
||
|
|
|
|
||
|
|
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||
|
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||
|
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September 30,
2015 |
|
December 31,
2014 |
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Investments, available-for-sale, at estimated fair value:
|
|
|
|
||||
Fixed maturities (amortized cost of $8,937,575 in 2015 and $9,929,137 in 2014)
|
$
|
9,353,951
|
|
|
$
|
10,422,882
|
|
Equity securities (cost of $2,290,017 in 2015 and $1,951,658 in 2014)
|
4,156,413
|
|
|
4,137,576
|
|
||
Short-term investments (estimated fair value approximates cost)
|
2,323,983
|
|
|
1,594,849
|
|
||
Total Investments
|
15,834,347
|
|
|
16,155,307
|
|
||
Cash and cash equivalents
|
2,261,201
|
|
|
1,960,169
|
|
||
Restricted cash and cash equivalents
|
371,794
|
|
|
522,225
|
|
||
Receivables
|
1,249,429
|
|
|
1,135,217
|
|
||
Reinsurance recoverable on unpaid losses
|
1,973,249
|
|
|
1,868,669
|
|
||
Reinsurance recoverable on paid losses
|
85,896
|
|
|
102,206
|
|
||
Deferred policy acquisition costs
|
379,767
|
|
|
353,410
|
|
||
Prepaid reinsurance premiums
|
367,626
|
|
|
365,458
|
|
||
Goodwill
|
1,043,713
|
|
|
1,049,115
|
|
||
Intangible assets
|
652,667
|
|
|
702,747
|
|
||
Other assets
|
961,884
|
|
|
985,834
|
|
||
Total Assets
|
$
|
25,181,573
|
|
|
$
|
25,200,357
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
$
|
10,388,209
|
|
|
$
|
10,404,152
|
|
Life and annuity benefits
|
1,159,901
|
|
|
1,305,818
|
|
||
Unearned premiums
|
2,377,904
|
|
|
2,245,690
|
|
||
Payables to insurance and reinsurance companies
|
318,078
|
|
|
276,122
|
|
||
Senior long-term debt and other debt (estimated fair value of $2,441,000 in 2015 and $2,493,000 in 2014)
|
2,240,517
|
|
|
2,253,594
|
|
||
Other liabilities
|
942,873
|
|
|
1,051,931
|
|
||
Total Liabilities
|
17,427,482
|
|
|
17,537,307
|
|
||
Redeemable noncontrolling interests
|
50,584
|
|
|
61,048
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
||||
Common stock
|
3,335,208
|
|
|
3,308,395
|
|
||
Retained earnings
|
2,942,606
|
|
|
2,581,866
|
|
||
Accumulated other comprehensive income
|
1,417,416
|
|
|
1,704,557
|
|
||
Total Shareholders' Equity
|
7,695,230
|
|
|
7,594,818
|
|
||
Noncontrolling interests
|
8,277
|
|
|
7,184
|
|
||
Total Equity
|
7,703,507
|
|
|
7,602,002
|
|
||
Total Liabilities and Equity
|
$
|
25,181,573
|
|
|
$
|
25,200,357
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||
OPERATING REVENUES
|
|
|
|
|
|
|
|
||||||||
Earned premiums
|
$
|
963,675
|
|
|
$
|
954,007
|
|
|
$
|
2,864,882
|
|
|
$
|
2,868,981
|
|
Net investment income
|
87,060
|
|
|
91,096
|
|
|
270,521
|
|
|
269,980
|
|
||||
Net realized investment gains (losses):
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment losses
|
(18,281
|
)
|
|
(2,851
|
)
|
|
(23,373
|
)
|
|
(3,858
|
)
|
||||
Net realized investment gains, excluding other-than-temporary impairment losses
|
3,574
|
|
|
7,046
|
|
|
20,342
|
|
|
32,567
|
|
||||
Net realized investment gains (losses)
|
(14,707
|
)
|
|
4,195
|
|
|
(3,031
|
)
|
|
28,709
|
|
||||
Other revenues
|
306,736
|
|
|
249,988
|
|
|
817,151
|
|
|
630,242
|
|
||||
Total Operating Revenues
|
1,342,764
|
|
|
1,299,286
|
|
|
3,949,523
|
|
|
3,797,912
|
|
||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
||||||||
Losses and loss adjustment expenses
|
484,737
|
|
|
570,966
|
|
|
1,467,926
|
|
|
1,723,675
|
|
||||
Underwriting, acquisition and insurance expenses
|
365,619
|
|
|
350,493
|
|
|
1,085,956
|
|
|
1,071,985
|
|
||||
Amortization of intangible assets
|
18,914
|
|
|
13,505
|
|
|
50,503
|
|
|
40,992
|
|
||||
Other expenses
|
290,749
|
|
|
231,193
|
|
|
763,986
|
|
|
598,303
|
|
||||
Total Operating Expenses
|
1,160,019
|
|
|
1,166,157
|
|
|
3,368,371
|
|
|
3,434,955
|
|
||||
Operating Income
|
182,745
|
|
|
133,129
|
|
|
581,152
|
|
|
362,957
|
|
||||
Interest expense
|
30,064
|
|
|
29,648
|
|
|
88,664
|
|
|
89,136
|
|
||||
Income Before Income Taxes
|
152,681
|
|
|
103,481
|
|
|
492,488
|
|
|
273,821
|
|
||||
Income tax expense
|
48,271
|
|
|
26,657
|
|
|
101,619
|
|
|
68,355
|
|
||||
Net Income
|
104,410
|
|
|
76,824
|
|
|
390,869
|
|
|
205,466
|
|
||||
Net income attributable to noncontrolling interests
|
1,891
|
|
|
1,021
|
|
|
5,989
|
|
|
1,879
|
|
||||
Net Income to Shareholders
|
$
|
102,519
|
|
|
$
|
75,803
|
|
|
$
|
384,880
|
|
|
$
|
203,587
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gains on investments, net of taxes:
|
|
|
|
|
|
|
|
||||||||
Net holding gains (losses) arising during the period
|
$
|
(149,266
|
)
|
|
$
|
(7,532
|
)
|
|
$
|
(258,386
|
)
|
|
$
|
348,096
|
|
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period
|
(8
|
)
|
|
123
|
|
|
111
|
|
|
118
|
|
||||
Reclassification adjustments for net gains (losses) included in net income
|
6,000
|
|
|
(4,990
|
)
|
|
(8,037
|
)
|
|
(15,752
|
)
|
||||
Change in net unrealized gains on investments, net of taxes
|
(143,274
|
)
|
|
(12,399
|
)
|
|
(266,312
|
)
|
|
332,462
|
|
||||
Change in foreign currency translation adjustments, net of taxes
|
(10,854
|
)
|
|
(27,223
|
)
|
|
(22,283
|
)
|
|
(19,639
|
)
|
||||
Change in net actuarial pension loss, net of taxes
|
475
|
|
|
320
|
|
|
1,407
|
|
|
964
|
|
||||
Total Other Comprehensive Income (Loss)
|
(153,653
|
)
|
|
(39,302
|
)
|
|
(287,188
|
)
|
|
313,787
|
|
||||
Comprehensive Income (Loss)
|
(49,243
|
)
|
|
37,522
|
|
|
103,681
|
|
|
519,253
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
1,900
|
|
|
1,020
|
|
|
5,942
|
|
|
1,890
|
|
||||
Comprehensive Income (Loss) to Shareholders
|
$
|
(51,143
|
)
|
|
$
|
36,502
|
|
|
$
|
97,739
|
|
|
$
|
517,363
|
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME PER SHARE
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
7.43
|
|
|
$
|
5.33
|
|
|
$
|
27.76
|
|
|
$
|
14.28
|
|
Diluted
|
$
|
7.39
|
|
|
$
|
5.30
|
|
|
$
|
27.60
|
|
|
$
|
14.21
|
|
(in thousands)
|
Common Shares
|
|
Common
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Shareholders'
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
|
Redeemable
Noncontrolling
Interests
|
|||||||||||||||
December 31, 2013
|
13,986
|
|
|
$
|
3,288,863
|
|
|
$
|
2,294,909
|
|
|
$
|
1,089,805
|
|
|
$
|
6,673,577
|
|
|
$
|
4,433
|
|
|
$
|
6,678,010
|
|
|
$
|
72,183
|
|
Net income (loss)
|
|
|
|
|
203,587
|
|
|
—
|
|
|
203,587
|
|
|
(1,072
|
)
|
|
202,515
|
|
|
2,951
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
—
|
|
|
313,776
|
|
|
313,776
|
|
|
—
|
|
|
313,776
|
|
|
11
|
|
|||||||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
517,363
|
|
|
(1,072
|
)
|
|
516,291
|
|
|
2,962
|
|
|||||||||||
Issuance of common stock
|
16
|
|
|
4,960
|
|
|
—
|
|
|
—
|
|
|
4,960
|
|
|
—
|
|
|
4,960
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(44
|
)
|
|
—
|
|
|
(25,922
|
)
|
|
—
|
|
|
(25,922
|
)
|
|
—
|
|
|
(25,922
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
18,421
|
|
|
—
|
|
|
—
|
|
|
18,421
|
|
|
—
|
|
|
18,421
|
|
|
—
|
|
|||||||
Adjustment of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(3,843
|
)
|
|
—
|
|
|
(3,843
|
)
|
|
—
|
|
|
(3,843
|
)
|
|
3,843
|
|
|||||||
Purchase of noncontrolling interest
|
—
|
|
|
(10,257
|
)
|
|
—
|
|
|
—
|
|
|
(10,257
|
)
|
|
905
|
|
|
(9,352
|
)
|
|
(18,566
|
)
|
|||||||
Other
|
—
|
|
|
881
|
|
|
13
|
|
|
—
|
|
|
894
|
|
|
3,910
|
|
|
4,804
|
|
|
(3,173
|
)
|
|||||||
September 30, 2014
|
13,958
|
|
|
$
|
3,302,868
|
|
|
$
|
2,468,744
|
|
|
$
|
1,403,581
|
|
|
$
|
7,175,193
|
|
|
$
|
8,176
|
|
|
$
|
7,183,369
|
|
|
$
|
57,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
December 31, 2014
|
13,962
|
|
|
$
|
3,308,395
|
|
|
$
|
2,581,866
|
|
|
$
|
1,704,557
|
|
|
$
|
7,594,818
|
|
|
$
|
7,184
|
|
|
$
|
7,602,002
|
|
|
$
|
61,048
|
|
Net income
|
|
|
|
|
384,880
|
|
|
—
|
|
|
384,880
|
|
|
745
|
|
|
385,625
|
|
|
5,244
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
—
|
|
|
(287,141
|
)
|
|
(287,141
|
)
|
|
—
|
|
|
(287,141
|
)
|
|
(47
|
)
|
|||||||||
Comprehensive Income
|
|
|
|
|
|
|
|
|
97,739
|
|
|
745
|
|
|
98,484
|
|
|
5,197
|
|
|||||||||||
Issuance of common stock
|
20
|
|
|
3,971
|
|
|
—
|
|
|
—
|
|
|
3,971
|
|
|
—
|
|
|
3,971
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(32
|
)
|
|
—
|
|
|
(27,262
|
)
|
|
—
|
|
|
(27,262
|
)
|
|
—
|
|
|
(27,262
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
19,983
|
|
|
—
|
|
|
—
|
|
|
19,983
|
|
|
—
|
|
|
19,983
|
|
|
—
|
|
|||||||
Adjustment of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
3,091
|
|
|
—
|
|
|
3,091
|
|
|
—
|
|
|
3,091
|
|
|
(3,091
|
)
|
|||||||
Purchase of noncontrolling interest
|
—
|
|
|
(1,447
|
)
|
|
—
|
|
|
—
|
|
|
(1,447
|
)
|
|
—
|
|
|
(1,447
|
)
|
|
(8,224
|
)
|
|||||||
Other
|
—
|
|
|
4,306
|
|
|
31
|
|
|
—
|
|
|
4,337
|
|
|
348
|
|
|
4,685
|
|
|
(4,346
|
)
|
|||||||
September 30, 2015
|
13,950
|
|
|
$
|
3,335,208
|
|
|
$
|
2,942,606
|
|
|
$
|
1,417,416
|
|
|
$
|
7,695,230
|
|
|
$
|
8,277
|
|
|
$
|
7,703,507
|
|
|
$
|
50,584
|
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
|
(dollars in thousands)
|
||||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
390,869
|
|
|
$
|
205,466
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
159,516
|
|
|
331,162
|
|
||
Net Cash Provided By Operating Activities
|
550,385
|
|
|
536,628
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Proceeds from sales of fixed maturities and equity securities
|
211,479
|
|
|
1,183,237
|
|
||
Proceeds from maturities, calls and prepayments of fixed maturities
|
1,162,500
|
|
|
1,110,128
|
|
||
Cost of fixed maturities and equity securities purchased
|
(928,601
|
)
|
|
(2,687,075
|
)
|
||
Net change in short-term investments
|
(687,673
|
)
|
|
(213,618
|
)
|
||
Proceeds from sales of equity method investments
|
22,204
|
|
|
101,938
|
|
||
Cost of equity method investments
|
(21,464
|
)
|
|
(9,441
|
)
|
||
Change in restricted cash and cash equivalents
|
136,203
|
|
|
203,635
|
|
||
Additions to property and equipment
|
(62,055
|
)
|
|
(52,350
|
)
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(316,307
|
)
|
||
Other
|
(761
|
)
|
|
(1,487
|
)
|
||
Net Cash Used By Investing Activities
|
(168,168
|
)
|
|
(681,340
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Additions to senior long-term debt and other debt
|
49,771
|
|
|
64,075
|
|
||
Repayment of senior long-term debt and other debt
|
(55,743
|
)
|
|
(40,397
|
)
|
||
Repurchases of common stock
|
(27,262
|
)
|
|
(25,922
|
)
|
||
Issuance of common stock
|
3,971
|
|
|
4,960
|
|
||
Purchase of noncontrolling interests
|
(12,474
|
)
|
|
(25,918
|
)
|
||
Distributions to noncontrolling interests
|
(3,724
|
)
|
|
(3,463
|
)
|
||
Other
|
(11,220
|
)
|
|
(20,074
|
)
|
||
Net Cash Used By Financing Activities
|
(56,681
|
)
|
|
(46,739
|
)
|
||
Effect of foreign currency rate changes on cash and cash equivalents
|
(24,504
|
)
|
|
(21,484
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
301,032
|
|
|
(212,935
|
)
|
||
Cash and cash equivalents at beginning of period
|
1,960,169
|
|
|
1,978,526
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
2,261,201
|
|
|
$
|
1,765,591
|
|
|
September 30, 2015
|
||||||||||||||||||
(dollars in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Holding
Gains
|
|
Gross
Unrealized
Holding
Losses
|
|
Unrealized
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
696,980
|
|
|
$
|
13,360
|
|
|
$
|
(1,545
|
)
|
|
$
|
—
|
|
|
$
|
708,795
|
|
Obligations of states, municipalities and political subdivisions
|
3,766,517
|
|
|
198,495
|
|
|
(8,688
|
)
|
|
—
|
|
|
3,956,324
|
|
|||||
Foreign governments
|
1,338,511
|
|
|
139,447
|
|
|
(826
|
)
|
|
—
|
|
|
1,477,132
|
|
|||||
Commercial mortgage-backed securities
|
441,814
|
|
|
10,808
|
|
|
(1,107
|
)
|
|
—
|
|
|
451,515
|
|
|||||
Residential mortgage-backed securities
|
860,869
|
|
|
34,272
|
|
|
(2,079
|
)
|
|
(2,258
|
)
|
|
890,804
|
|
|||||
Asset-backed securities
|
45,470
|
|
|
55
|
|
|
(125
|
)
|
|
—
|
|
|
45,400
|
|
|||||
Corporate bonds
|
1,787,414
|
|
|
48,535
|
|
|
(10,288
|
)
|
|
(1,680
|
)
|
|
1,823,981
|
|
|||||
Total fixed maturities
|
8,937,575
|
|
|
444,972
|
|
|
(24,658
|
)
|
|
(3,938
|
)
|
|
9,353,951
|
|
|||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance, banks and other financial institutions
|
629,814
|
|
|
658,077
|
|
|
(12,482
|
)
|
|
—
|
|
|
1,275,409
|
|
|||||
Industrial, consumer and all other
|
1,660,203
|
|
|
1,281,314
|
|
|
(60,513
|
)
|
|
—
|
|
|
2,881,004
|
|
|||||
Total equity securities
|
2,290,017
|
|
|
1,939,391
|
|
|
(72,995
|
)
|
|
—
|
|
|
4,156,413
|
|
|||||
Short-term investments
|
2,323,917
|
|
|
71
|
|
|
(5
|
)
|
|
—
|
|
|
2,323,983
|
|
|||||
Investments, available-for-sale
|
$
|
13,551,509
|
|
|
$
|
2,384,434
|
|
|
$
|
(97,658
|
)
|
|
$
|
(3,938
|
)
|
|
$
|
15,834,347
|
|
|
December 31, 2014
|
||||||||||||||||||
(dollars in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Holding
Gains
|
|
Gross
Unrealized
Holding
Losses
|
|
Unrealized
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
662,462
|
|
|
$
|
12,963
|
|
|
$
|
(2,163
|
)
|
|
$
|
—
|
|
|
$
|
673,262
|
|
Obligations of states, municipalities and political subdivisions
|
4,075,748
|
|
|
245,158
|
|
|
(3,359
|
)
|
|
—
|
|
|
4,317,547
|
|
|||||
Foreign governments
|
1,458,255
|
|
|
154,707
|
|
|
(1,041
|
)
|
|
—
|
|
|
1,611,921
|
|
|||||
Commercial mortgage-backed securities
|
427,904
|
|
|
5,325
|
|
|
(2,602
|
)
|
|
—
|
|
|
430,627
|
|
|||||
Residential mortgage-backed securities
|
954,263
|
|
|
34,324
|
|
|
(3,482
|
)
|
|
(2,258
|
)
|
|
982,847
|
|
|||||
Asset-backed securities
|
100,073
|
|
|
99
|
|
|
(682
|
)
|
|
—
|
|
|
99,490
|
|
|||||
Corporate bonds
|
2,250,432
|
|
|
69,016
|
|
|
(10,441
|
)
|
|
(1,819
|
)
|
|
2,307,188
|
|
|||||
Total fixed maturities
|
9,929,137
|
|
|
521,592
|
|
|
(23,770
|
)
|
|
(4,077
|
)
|
|
10,422,882
|
|
|||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance, banks and other financial institutions
|
523,739
|
|
|
789,717
|
|
|
(1,531
|
)
|
|
—
|
|
|
1,311,925
|
|
|||||
Industrial, consumer and all other
|
1,427,919
|
|
|
1,403,566
|
|
|
(5,834
|
)
|
|
—
|
|
|
2,825,651
|
|
|||||
Total equity securities
|
1,951,658
|
|
|
2,193,283
|
|
|
(7,365
|
)
|
|
—
|
|
|
4,137,576
|
|
|||||
Short-term investments
|
1,594,819
|
|
|
36
|
|
|
(6
|
)
|
|
—
|
|
|
1,594,849
|
|
|||||
Investments, available-for-sale
|
$
|
13,475,614
|
|
|
$
|
2,714,911
|
|
|
$
|
(31,141
|
)
|
|
$
|
(4,077
|
)
|
|
$
|
16,155,307
|
|
|
September 30, 2015
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
(dollars in thousands)
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
72,511
|
|
|
$
|
(1,265
|
)
|
|
$
|
93,566
|
|
|
$
|
(280
|
)
|
|
$
|
166,077
|
|
|
$
|
(1,545
|
)
|
Obligations of states, municipalities and political subdivisions
|
297,670
|
|
|
(5,618
|
)
|
|
59,482
|
|
|
(3,070
|
)
|
|
357,152
|
|
|
(8,688
|
)
|
||||||
Foreign governments
|
27,208
|
|
|
(594
|
)
|
|
41,433
|
|
|
(232
|
)
|
|
68,641
|
|
|
(826
|
)
|
||||||
Commercial mortgage-backed securities
|
66,074
|
|
|
(258
|
)
|
|
100,233
|
|
|
(849
|
)
|
|
166,307
|
|
|
(1,107
|
)
|
||||||
Residential mortgage-backed securities
|
24,353
|
|
|
(2,321
|
)
|
|
147,001
|
|
|
(2,016
|
)
|
|
171,354
|
|
|
(4,337
|
)
|
||||||
Asset-backed securities
|
5,678
|
|
|
(2
|
)
|
|
26,720
|
|
|
(123
|
)
|
|
32,398
|
|
|
(125
|
)
|
||||||
Corporate bonds
|
270,889
|
|
|
(6,364
|
)
|
|
343,268
|
|
|
(5,604
|
)
|
|
614,157
|
|
|
(11,968
|
)
|
||||||
Total fixed maturities
|
764,383
|
|
|
(16,422
|
)
|
|
811,703
|
|
|
(12,174
|
)
|
|
1,576,086
|
|
|
(28,596
|
)
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance, banks and other financial institutions
|
139,456
|
|
|
(11,308
|
)
|
|
6,676
|
|
|
(1,174
|
)
|
|
146,132
|
|
|
(12,482
|
)
|
||||||
Industrial, consumer and all other
|
387,475
|
|
|
(60,006
|
)
|
|
19,085
|
|
|
(507
|
)
|
|
406,560
|
|
|
(60,513
|
)
|
||||||
Total equity securities
|
526,931
|
|
|
(71,314
|
)
|
|
25,761
|
|
|
(1,681
|
)
|
|
552,692
|
|
|
(72,995
|
)
|
||||||
Short-term investments
|
139,990
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
139,990
|
|
|
(5
|
)
|
||||||
Total
|
$
|
1,431,304
|
|
|
$
|
(87,741
|
)
|
|
$
|
837,464
|
|
|
$
|
(13,855
|
)
|
|
$
|
2,268,768
|
|
|
$
|
(101,596
|
)
|
|
December 31, 2014
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
(dollars in thousands)
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
108,250
|
|
|
$
|
(62
|
)
|
|
$
|
163,359
|
|
|
$
|
(2,101
|
)
|
|
$
|
271,609
|
|
|
$
|
(2,163
|
)
|
Obligations of states, municipalities and political subdivisions
|
58,583
|
|
|
(542
|
)
|
|
92,441
|
|
|
(2,817
|
)
|
|
151,024
|
|
|
(3,359
|
)
|
||||||
Foreign governments
|
18,856
|
|
|
(386
|
)
|
|
56,217
|
|
|
(655
|
)
|
|
75,073
|
|
|
(1,041
|
)
|
||||||
Commercial mortgage-backed securities
|
45,931
|
|
|
(210
|
)
|
|
147,558
|
|
|
(2,392
|
)
|
|
193,489
|
|
|
(2,602
|
)
|
||||||
Residential mortgage-backed securities
|
9,613
|
|
|
(2,285
|
)
|
|
207,374
|
|
|
(3,455
|
)
|
|
216,987
|
|
|
(5,740
|
)
|
||||||
Asset-backed securities
|
30,448
|
|
|
(20
|
)
|
|
45,160
|
|
|
(662
|
)
|
|
75,608
|
|
|
(682
|
)
|
||||||
Corporate bonds
|
141,176
|
|
|
(2,263
|
)
|
|
621,821
|
|
|
(9,997
|
)
|
|
762,997
|
|
|
(12,260
|
)
|
||||||
Total fixed maturities
|
412,857
|
|
|
(5,768
|
)
|
|
1,333,930
|
|
|
(22,079
|
)
|
|
1,746,787
|
|
|
(27,847
|
)
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance, banks and other financial institutions
|
16,219
|
|
|
(1,531
|
)
|
|
—
|
|
|
—
|
|
|
16,219
|
|
|
(1,531
|
)
|
||||||
Industrial, consumer and all other
|
86,062
|
|
|
(5,834
|
)
|
|
—
|
|
|
—
|
|
|
86,062
|
|
|
(5,834
|
)
|
||||||
Total equity securities
|
102,281
|
|
|
(7,365
|
)
|
|
—
|
|
|
—
|
|
|
102,281
|
|
|
(7,365
|
)
|
||||||
Short-term investments
|
181,964
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
181,964
|
|
|
(6
|
)
|
||||||
Total
|
$
|
697,102
|
|
|
$
|
(13,139
|
)
|
|
$
|
1,333,930
|
|
|
$
|
(22,079
|
)
|
|
$
|
2,031,032
|
|
|
$
|
(35,218
|
)
|
(dollars in thousands)
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
538,793
|
|
|
$
|
541,638
|
|
Due after one year through five years
|
1,899,246
|
|
|
1,950,115
|
|
||
Due after five years through ten years
|
1,655,136
|
|
|
1,753,390
|
|
||
Due after ten years
|
3,496,247
|
|
|
3,721,089
|
|
||
|
7,589,422
|
|
|
7,966,232
|
|
||
Commercial mortgage-backed securities
|
441,814
|
|
|
451,515
|
|
||
Residential mortgage-backed securities
|
860,869
|
|
|
890,804
|
|
||
Asset-backed securities
|
45,470
|
|
|
45,400
|
|
||
Total fixed maturities
|
$
|
8,937,575
|
|
|
$
|
9,353,951
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Interest:
|
|
|
|
|
|
|
|
||||||||
Municipal bonds (tax-exempt)
|
$
|
21,979
|
|
|
$
|
24,505
|
|
|
$
|
72,124
|
|
|
$
|
72,796
|
|
Municipal bonds (taxable)
|
14,667
|
|
|
13,523
|
|
|
42,917
|
|
|
35,133
|
|
||||
Other taxable bonds
|
34,368
|
|
|
38,741
|
|
|
103,519
|
|
|
114,594
|
|
||||
Short-term investments, including overnight deposits
|
1,287
|
|
|
1,530
|
|
|
3,654
|
|
|
4,612
|
|
||||
Dividends on equity securities
|
17,887
|
|
|
14,678
|
|
|
55,544
|
|
|
46,042
|
|
||||
Income (loss) from equity method investments
|
(4
|
)
|
|
2,253
|
|
|
3,052
|
|
|
7,294
|
|
||||
Other
|
37
|
|
|
(266
|
)
|
|
577
|
|
|
1,436
|
|
||||
|
90,221
|
|
|
94,964
|
|
|
281,387
|
|
|
281,907
|
|
||||
Investment expenses
|
(3,161
|
)
|
|
(3,868
|
)
|
|
(10,866
|
)
|
|
(11,927
|
)
|
||||
Net investment income
|
$
|
87,060
|
|
|
$
|
91,096
|
|
|
$
|
270,521
|
|
|
$
|
269,980
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Realized gains:
|
|
|
|
|
|
|
|
||||||||
Sales of fixed maturities
|
$
|
435
|
|
|
$
|
739
|
|
|
$
|
2,769
|
|
|
$
|
6,381
|
|
Sales of equity securities
|
11,329
|
|
|
10,793
|
|
|
34,285
|
|
|
36,942
|
|
||||
Other
|
1,026
|
|
|
134
|
|
|
3,297
|
|
|
11,958
|
|
||||
Total realized gains
|
12,790
|
|
|
11,666
|
|
|
40,351
|
|
|
55,281
|
|
||||
Realized losses:
|
|
|
|
|
|
|
|
||||||||
Sales of fixed maturities
|
(3,730
|
)
|
|
(1,658
|
)
|
|
(3,947
|
)
|
|
(17,805
|
)
|
||||
Sales of equity securities
|
(400
|
)
|
|
(175
|
)
|
|
(672
|
)
|
|
(373
|
)
|
||||
Other-than-temporary impairments
|
(18,281
|
)
|
|
(2,851
|
)
|
|
(23,373
|
)
|
|
(3,858
|
)
|
||||
Other
|
(5,086
|
)
|
|
(2,787
|
)
|
|
(15,390
|
)
|
|
(4,536
|
)
|
||||
Total realized losses
|
(27,497
|
)
|
|
(7,471
|
)
|
|
(43,382
|
)
|
|
(26,572
|
)
|
||||
Net realized investment gains (losses)
|
$
|
(14,707
|
)
|
|
$
|
4,195
|
|
|
$
|
(3,031
|
)
|
|
$
|
28,709
|
|
Change in net unrealized gains on investments:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
$
|
102,844
|
|
|
$
|
41,615
|
|
|
$
|
(77,369
|
)
|
|
$
|
337,865
|
|
Equity securities
|
(313,075
|
)
|
|
(57,773
|
)
|
|
(319,522
|
)
|
|
160,936
|
|
||||
Short-term investments
|
45
|
|
|
37
|
|
|
36
|
|
|
35
|
|
||||
Net increase (decrease)
|
$
|
(210,186
|
)
|
|
$
|
(16,121
|
)
|
|
$
|
(396,855
|
)
|
|
$
|
498,836
|
|
(dollars in thousands)
|
September 30,
2015 |
|
December 31,
2014 |
||||
Restricted assets held in trust or on deposit to support underwriting activities
|
$
|
4,733,990
|
|
|
$
|
4,961,061
|
|
Investments and cash and cash equivalents pledged as security for letters of credit
|
654,208
|
|
|
635,340
|
|
||
Total
|
$
|
5,388,198
|
|
|
$
|
5,596,401
|
|
(dollars in thousands)
|
September 30,
2015 |
|
December 31,
2014 |
||||
Investments, available-for-sale
|
$
|
5,016,404
|
|
|
$
|
5,040,413
|
|
Restricted cash and cash equivalents
|
371,794
|
|
|
522,225
|
|
||
Other assets
|
—
|
|
|
33,763
|
|
||
Total
|
$
|
5,388,198
|
|
|
$
|
5,596,401
|
|
|
September 30, 2015
|
||||||||||||||
(dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
—
|
|
|
$
|
708,795
|
|
|
$
|
—
|
|
|
$
|
708,795
|
|
Obligations of states, municipalities and political subdivisions
|
—
|
|
|
3,956,324
|
|
|
—
|
|
|
3,956,324
|
|
||||
Foreign governments
|
—
|
|
|
1,477,132
|
|
|
—
|
|
|
1,477,132
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
451,515
|
|
|
—
|
|
|
451,515
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
890,804
|
|
|
—
|
|
|
890,804
|
|
||||
Asset-backed securities
|
—
|
|
|
45,400
|
|
|
—
|
|
|
45,400
|
|
||||
Corporate bonds
|
—
|
|
|
1,823,981
|
|
|
—
|
|
|
1,823,981
|
|
||||
Total fixed maturities
|
—
|
|
|
9,353,951
|
|
|
—
|
|
|
9,353,951
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Insurance, banks and other financial institutions
|
1,275,409
|
|
|
—
|
|
|
—
|
|
|
1,275,409
|
|
||||
Industrial, consumer and all other
|
2,881,004
|
|
|
—
|
|
|
—
|
|
|
2,881,004
|
|
||||
Total equity securities
|
4,156,413
|
|
|
—
|
|
|
—
|
|
|
4,156,413
|
|
||||
Short-term investments
|
2,224,533
|
|
|
99,450
|
|
|
—
|
|
|
2,323,983
|
|
||||
Total investments available-for-sale
|
$
|
6,380,946
|
|
|
$
|
9,453,401
|
|
|
$
|
—
|
|
|
$
|
15,834,347
|
|
|
December 31, 2014
|
||||||||||||||
(dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
—
|
|
|
$
|
673,262
|
|
|
$
|
—
|
|
|
$
|
673,262
|
|
Obligations of states, municipalities and political subdivisions
|
—
|
|
|
4,317,547
|
|
|
—
|
|
|
4,317,547
|
|
||||
Foreign governments
|
—
|
|
|
1,611,921
|
|
|
—
|
|
|
1,611,921
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
430,627
|
|
|
—
|
|
|
430,627
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
982,847
|
|
|
—
|
|
|
982,847
|
|
||||
Asset-backed securities
|
—
|
|
|
99,490
|
|
|
—
|
|
|
99,490
|
|
||||
Corporate bonds
|
—
|
|
|
2,307,188
|
|
|
—
|
|
|
2,307,188
|
|
||||
Total fixed maturities
|
—
|
|
|
10,422,882
|
|
|
—
|
|
|
10,422,882
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Insurance, banks and other financial institutions
|
1,311,925
|
|
|
—
|
|
|
—
|
|
|
1,311,925
|
|
||||
Industrial, consumer and all other
|
2,825,651
|
|
|
—
|
|
|
—
|
|
|
2,825,651
|
|
||||
Total equity securities
|
4,137,576
|
|
|
—
|
|
|
—
|
|
|
4,137,576
|
|
||||
Short-term investments
|
1,469,975
|
|
|
124,874
|
|
|
—
|
|
|
1,594,849
|
|
||||
Total investments available-for-sale
|
$
|
5,607,551
|
|
|
$
|
10,547,756
|
|
|
$
|
—
|
|
|
$
|
16,155,307
|
|
|
Quarter Ended September 30, 2015
|
||||||||||||||||||||||
(dollars in thousands)
|
U.S.
Insurance
|
|
International
Insurance
|
|
Reinsurance
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
635,926
|
|
|
$
|
284,576
|
|
|
$
|
239,094
|
|
|
$
|
(1,232
|
)
|
|
$
|
—
|
|
|
$
|
1,158,364
|
|
Net written premiums
|
536,285
|
|
|
213,423
|
|
|
204,336
|
|
|
(860
|
)
|
|
—
|
|
|
953,184
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
534,615
|
|
|
225,034
|
|
|
204,825
|
|
|
(799
|
)
|
|
—
|
|
|
963,675
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(357,400
|
)
|
|
(162,024
|
)
|
|
(128,428
|
)
|
|
—
|
|
|
—
|
|
|
(647,852
|
)
|
||||||
Prior accident years
|
74,976
|
|
|
57,860
|
|
|
24,241
|
|
|
6,038
|
|
|
—
|
|
|
163,115
|
|
||||||
Underwriting, acquisition and insurance expenses
|
(200,272
|
)
|
|
(92,680
|
)
|
|
(72,449
|
)
|
|
(218
|
)
|
|
—
|
|
|
(365,619
|
)
|
||||||
Underwriting profit
|
51,919
|
|
|
28,190
|
|
|
28,189
|
|
|
5,021
|
|
|
—
|
|
|
113,319
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87,060
|
|
|
87,060
|
|
||||||
Net realized investment losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,707
|
)
|
|
(14,707
|
)
|
||||||
Other revenues (insurance)
|
(41
|
)
|
|
1,096
|
|
|
246
|
|
|
42
|
|
|
—
|
|
|
1,343
|
|
||||||
Other expenses (insurance)
|
(960
|
)
|
|
(1,379
|
)
|
|
—
|
|
|
(6,913
|
)
|
|
—
|
|
|
(9,252
|
)
|
||||||
Segment profit (loss)
|
$
|
50,918
|
|
|
$
|
27,907
|
|
|
$
|
28,435
|
|
|
$
|
(1,850
|
)
|
|
$
|
72,353
|
|
|
$
|
177,763
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
305,393
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(281,497
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(18,914
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(30,064
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
152,681
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
90
|
%
|
|
87
|
%
|
|
86
|
%
|
|
NM
|
|
(2)
|
|
|
88
|
%
|
|
Quarter Ended September 30, 2014
|
||||||||||||||||||||||
(dollars in thousands)
|
U.S.
Insurance
|
|
International
Insurance
|
|
Reinsurance
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
619,510
|
|
|
$
|
271,045
|
|
|
$
|
206,125
|
|
|
$
|
(230
|
)
|
|
$
|
—
|
|
|
$
|
1,096,450
|
|
Net written premiums
|
520,511
|
|
|
194,639
|
|
|
166,848
|
|
|
(217
|
)
|
|
—
|
|
|
881,781
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
516,753
|
|
|
216,764
|
|
|
220,513
|
|
|
(23
|
)
|
|
—
|
|
|
954,007
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(348,877
|
)
|
|
(160,132
|
)
|
|
(155,189
|
)
|
|
—
|
|
|
—
|
|
|
(664,198
|
)
|
||||||
Prior accident years
|
60,944
|
|
|
30,791
|
|
|
8,258
|
|
|
(6,761
|
)
|
|
—
|
|
|
93,232
|
|
||||||
Underwriting, acquisition and insurance expenses
|
(202,765
|
)
|
|
(81,706
|
)
|
|
(65,874
|
)
|
|
(148
|
)
|
|
—
|
|
|
(350,493
|
)
|
||||||
Underwriting profit (loss)
|
26,055
|
|
|
5,717
|
|
|
7,708
|
|
|
(6,932
|
)
|
|
—
|
|
|
32,548
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91,096
|
|
|
91,096
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,195
|
|
|
4,195
|
|
||||||
Other revenues (insurance)
|
563
|
|
|
3,478
|
|
|
(864
|
)
|
|
1,022
|
|
|
—
|
|
|
4,199
|
|
||||||
Other expenses (insurance)
|
(1,325
|
)
|
|
(3,831
|
)
|
|
—
|
|
|
(8,330
|
)
|
|
—
|
|
|
(13,486
|
)
|
||||||
Segment profit (loss)
|
$
|
25,293
|
|
|
$
|
5,364
|
|
|
$
|
6,844
|
|
|
$
|
(14,240
|
)
|
|
$
|
95,291
|
|
|
$
|
118,552
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
245,789
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(217,707
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(13,505
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(29,648
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
103,481
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
95
|
%
|
|
97
|
%
|
|
97
|
%
|
|
NM
|
|
(2)
|
|
|
97
|
%
|
(1)
|
The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.
|
(2)
|
NM – Ratio is not meaningful.
|
|
Nine Months Ended September 30, 2015
|
||||||||||||||||||||||
(dollars in thousands)
|
U.S.
Insurance
|
|
International
Insurance
|
|
Reinsurance
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
1,890,144
|
|
|
$
|
911,962
|
|
|
$
|
875,676
|
|
|
$
|
(1,159
|
)
|
|
$
|
—
|
|
|
$
|
3,676,623
|
|
Net written premiums
|
1,587,092
|
|
|
700,260
|
|
|
736,068
|
|
|
(462
|
)
|
|
—
|
|
|
3,022,958
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
1,569,615
|
|
|
654,936
|
|
|
640,719
|
|
|
(388
|
)
|
|
—
|
|
|
2,864,882
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(1,015,492
|
)
|
|
(479,764
|
)
|
|
(431,791
|
)
|
|
—
|
|
|
—
|
|
|
(1,927,047
|
)
|
||||||
Prior accident years
|
211,177
|
|
|
177,883
|
|
|
65,746
|
|
|
4,315
|
|
|
—
|
|
|
459,121
|
|
||||||
Underwriting, acquisition and insurance expenses
|
(597,388
|
)
|
|
(266,091
|
)
|
|
(222,172
|
)
|
|
(305
|
)
|
|
—
|
|
|
(1,085,956
|
)
|
||||||
Underwriting profit
|
167,912
|
|
|
86,964
|
|
|
52,502
|
|
|
3,622
|
|
|
—
|
|
|
311,000
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
270,521
|
|
|
270,521
|
|
||||||
Net realized investment losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,031
|
)
|
|
(3,031
|
)
|
||||||
Other revenues (insurance)
|
3,564
|
|
|
7,398
|
|
|
1,138
|
|
|
369
|
|
|
—
|
|
|
12,469
|
|
||||||
Other expenses (insurance)
|
(3,149
|
)
|
|
(4,101
|
)
|
|
—
|
|
|
(17,610
|
)
|
|
—
|
|
|
(24,860
|
)
|
||||||
Segment profit (loss)
|
$
|
168,327
|
|
|
$
|
90,261
|
|
|
$
|
53,640
|
|
|
$
|
(13,619
|
)
|
|
$
|
267,490
|
|
|
$
|
566,099
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
804,682
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(739,126
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(50,503
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(88,664
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
492,488
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
89
|
%
|
|
87
|
%
|
|
92
|
%
|
|
NM
|
|
(2)
|
|
|
89
|
%
|
|
Nine Months Ended September 30, 2014
|
||||||||||||||||||||||
(dollars in thousands)
|
U.S.
Insurance
|
|
International
Insurance
|
|
Reinsurance
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
1,876,114
|
|
|
$
|
924,401
|
|
|
$
|
999,036
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
3,799,585
|
|
Net written premiums
|
1,554,847
|
|
|
694,311
|
|
|
855,930
|
|
|
335
|
|
|
—
|
|
|
3,105,423
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
1,499,571
|
|
|
678,772
|
|
|
690,117
|
|
|
521
|
|
|
—
|
|
|
2,868,981
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(997,804
|
)
|
|
(495,441
|
)
|
|
(490,555
|
)
|
|
—
|
|
|
—
|
|
|
(1,983,800
|
)
|
||||||
Prior accident years
|
142,381
|
|
|
102,658
|
|
|
49,811
|
|
|
(34,725
|
)
|
|
—
|
|
|
260,125
|
|
||||||
Underwriting, acquisition and insurance expenses
|
(595,208
|
)
|
|
(250,157
|
)
|
|
(226,109
|
)
|
|
(511
|
)
|
|
—
|
|
|
(1,071,985
|
)
|
||||||
Underwriting profit (loss)
|
48,940
|
|
|
35,832
|
|
|
23,264
|
|
|
(34,715
|
)
|
|
—
|
|
|
73,321
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
269,980
|
|
|
269,980
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,709
|
|
|
28,709
|
|
||||||
Other revenues (insurance)
|
3,333
|
|
|
15,183
|
|
|
2,304
|
|
|
1,208
|
|
|
—
|
|
|
22,028
|
|
||||||
Other expenses (insurance)
|
(4,436
|
)
|
|
(11,539
|
)
|
|
(1,097
|
)
|
|
(25,615
|
)
|
|
—
|
|
|
(42,687
|
)
|
||||||
Segment profit (loss)
|
$
|
47,837
|
|
|
$
|
39,476
|
|
|
$
|
24,471
|
|
|
$
|
(59,122
|
)
|
|
$
|
298,689
|
|
|
$
|
351,351
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
608,214
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(555,616
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(40,992
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(89,136
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
273,821
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
97
|
%
|
|
95
|
%
|
|
97
|
%
|
|
NM
|
|
(2)
|
|
|
97
|
%
|
(1)
|
The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.
|
(2)
|
NM – Ratio is not meaningful.
|
b)
|
The following table reconciles segment assets to the Company's consolidated balance sheets.
|
(dollars in thousands)
|
September 30, 2015
|
|
December 31, 2014
|
||||
Segment assets:
|
|
|
|
||||
Investing
|
$
|
18,342,049
|
|
|
$
|
18,531,150
|
|
Underwriting
|
5,620,534
|
|
|
5,422,445
|
|
||
Total segment assets
|
23,962,583
|
|
|
23,953,595
|
|
||
Non-insurance operations
|
1,218,990
|
|
|
1,246,762
|
|
||
Total assets
|
$
|
25,181,573
|
|
|
$
|
25,200,357
|
|
|
Quarter Ended September 30,
|
||||||||||||||
|
2015
|
|
2014
|
||||||||||||
(dollars in thousands)
|
Other
Revenues
|
|
Other
Expenses
|
|
Other
Revenues
|
|
Other
Expenses
|
||||||||
Insurance:
|
|
|
|
|
|
|
|
||||||||
Managing general agent operations
|
$
|
1,055
|
|
|
$
|
2,339
|
|
|
$
|
3,812
|
|
|
$
|
4,832
|
|
Life and annuity
|
42
|
|
|
6,913
|
|
|
1,022
|
|
|
8,330
|
|
||||
Other
|
246
|
|
|
—
|
|
|
(635
|
)
|
|
324
|
|
||||
|
1,343
|
|
|
9,252
|
|
|
4,199
|
|
|
13,486
|
|
||||
Non-Insurance:
|
|
|
|
|
|
|
|
||||||||
Markel Ventures: Manufacturing
|
216,057
|
|
|
192,707
|
|
|
169,754
|
|
|
148,690
|
|
||||
Markel Ventures: Non-Manufacturing
|
83,098
|
|
|
83,104
|
|
|
70,303
|
|
|
64,728
|
|
||||
Other
|
6,238
|
|
|
5,686
|
|
|
5,732
|
|
|
4,289
|
|
||||
|
305,393
|
|
|
281,497
|
|
|
245,789
|
|
|
217,707
|
|
||||
Total
|
$
|
306,736
|
|
|
$
|
290,749
|
|
|
$
|
249,988
|
|
|
$
|
231,193
|
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2015
|
|
2014
|
||||||||||||
(dollars in thousands)
|
Other
Revenues
|
|
Other
Expenses
|
|
Other
Revenues
|
|
Other
Expenses
|
||||||||
Insurance:
|
|
|
|
|
|
|
|
||||||||
Managing general agent operations
|
$
|
10,043
|
|
|
$
|
7,250
|
|
|
$
|
17,764
|
|
|
$
|
14,931
|
|
Life and annuity
|
369
|
|
|
17,610
|
|
|
1,208
|
|
|
25,615
|
|
||||
Other
|
2,057
|
|
|
—
|
|
|
3,056
|
|
|
2,141
|
|
||||
|
12,469
|
|
|
24,860
|
|
|
22,028
|
|
|
42,687
|
|
||||
Non-Insurance:
|
|
|
|
|
|
|
|
||||||||
Markel Ventures: Manufacturing
|
567,960
|
|
|
513,087
|
|
|
395,448
|
|
|
355,480
|
|
||||
Markel Ventures: Non-Manufacturing
|
216,191
|
|
|
209,947
|
|
|
199,457
|
|
|
185,648
|
|
||||
Other
|
20,531
|
|
|
16,092
|
|
|
13,309
|
|
|
14,488
|
|
||||
|
804,682
|
|
|
739,126
|
|
|
608,214
|
|
|
555,616
|
|
||||
Total
|
$
|
817,151
|
|
|
$
|
763,986
|
|
|
$
|
630,242
|
|
|
$
|
598,303
|
|
|
Quarter Ended September 30,
|
||||||||||||||
|
2015
|
|
2014
|
||||||||||||
(dollars in thousands)
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
||||||||
Direct
|
$
|
878,269
|
|
|
$
|
881,512
|
|
|
$
|
841,582
|
|
|
$
|
875,191
|
|
Assumed
|
280,095
|
|
|
293,481
|
|
|
254,868
|
|
|
301,665
|
|
||||
Ceded
|
(205,180
|
)
|
|
(211,318
|
)
|
|
(214,669
|
)
|
|
(222,849
|
)
|
||||
Net premiums
|
$
|
953,184
|
|
|
$
|
963,675
|
|
|
$
|
881,781
|
|
|
$
|
954,007
|
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2015
|
|
2014
|
||||||||||||
(dollars in thousands)
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
||||||||
Direct
|
$
|
2,631,734
|
|
|
$
|
2,601,458
|
|
|
$
|
2,613,339
|
|
|
$
|
2,556,350
|
|
Assumed
|
1,044,889
|
|
|
910,640
|
|
|
1,186,246
|
|
|
985,981
|
|
||||
Ceded
|
(653,665
|
)
|
|
(647,216
|
)
|
|
(694,162
|
)
|
|
(673,350
|
)
|
||||
Net premiums
|
$
|
3,022,958
|
|
|
$
|
2,864,882
|
|
|
$
|
3,105,423
|
|
|
$
|
2,868,981
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(in thousands, except per share amounts)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net income to shareholders
|
$
|
102,519
|
|
|
$
|
75,803
|
|
|
$
|
384,880
|
|
|
$
|
203,587
|
|
Adjustment of redeemable noncontrolling interests
|
1,376
|
|
|
(1,259
|
)
|
|
3,091
|
|
|
(3,843
|
)
|
||||
Adjusted net income to shareholders
|
$
|
103,895
|
|
|
$
|
74,544
|
|
|
$
|
387,971
|
|
|
$
|
199,744
|
|
|
|
|
|
|
|
|
|
||||||||
Basic common shares outstanding
|
13,983
|
|
|
13,981
|
|
|
13,977
|
|
|
13,986
|
|
||||
Dilutive potential common shares from conversion of options
|
8
|
|
|
11
|
|
|
9
|
|
|
11
|
|
||||
Dilutive potential common shares from conversion of restricted stock
|
71
|
|
|
65
|
|
|
70
|
|
|
58
|
|
||||
Diluted shares outstanding
|
14,062
|
|
|
14,057
|
|
|
14,056
|
|
|
14,055
|
|
||||
Basic net income per share
|
$
|
7.43
|
|
|
$
|
5.33
|
|
|
$
|
27.76
|
|
|
$
|
14.28
|
|
Diluted net income per share
|
$
|
7.39
|
|
|
$
|
5.30
|
|
|
$
|
27.60
|
|
|
$
|
14.21
|
|
(dollars in thousands)
|
Unrealized Holding Gains on Available-for-Sale Securities
|
|
Foreign Currency
|
|
Net Actuarial Pension Loss
|
|
Total
|
||||||||
December 31, 2013
|
$
|
1,131,507
|
|
|
$
|
(11,246
|
)
|
|
$
|
(30,456
|
)
|
|
$
|
1,089,805
|
|
Other comprehensive income (loss) before reclassifications
|
348,214
|
|
|
(19,650
|
)
|
|
—
|
|
|
328,564
|
|
||||
Amounts reclassified from accumulated other comprehensive income
|
(15,752
|
)
|
|
—
|
|
|
964
|
|
|
(14,788
|
)
|
||||
Total other comprehensive income (loss)
|
332,462
|
|
|
(19,650
|
)
|
|
964
|
|
|
313,776
|
|
||||
September 30, 2014
|
$
|
1,463,969
|
|
|
$
|
(30,896
|
)
|
|
$
|
(29,492
|
)
|
|
$
|
1,403,581
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2014
|
$
|
1,793,254
|
|
|
$
|
(43,491
|
)
|
|
$
|
(45,206
|
)
|
|
$
|
1,704,557
|
|
Other comprehensive loss before reclassifications
|
(258,275
|
)
|
|
(22,236
|
)
|
|
—
|
|
|
(280,511
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
(8,037
|
)
|
|
—
|
|
|
1,407
|
|
|
(6,630
|
)
|
||||
Total other comprehensive income (loss)
|
(266,312
|
)
|
|
(22,236
|
)
|
|
1,407
|
|
|
(287,141
|
)
|
||||
September 30, 2015
|
$
|
1,526,942
|
|
|
$
|
(65,727
|
)
|
|
$
|
(43,799
|
)
|
|
$
|
1,417,416
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Change in net unrealized gains on investments:
|
|
|
|
|
|
|
|
||||||||
Net holding gains (losses) arising during the period
|
$
|
(71,549
|
)
|
|
$
|
(1,895
|
)
|
|
$
|
(129,546
|
)
|
|
$
|
171,309
|
|
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period
|
(10
|
)
|
|
31
|
|
|
28
|
|
|
600
|
|
||||
Reclassification adjustments for net gains (losses) included in net income
|
4,647
|
|
|
(1,858
|
)
|
|
(1,025
|
)
|
|
(5,535
|
)
|
||||
Change in net unrealized gains on investments
|
(66,912
|
)
|
|
(3,722
|
)
|
|
(130,543
|
)
|
|
166,374
|
|
||||
Change in foreign currency translation adjustments
|
829
|
|
|
43
|
|
|
1,662
|
|
|
1,509
|
|
||||
Change in net actuarial pension loss
|
119
|
|
|
80
|
|
|
352
|
|
|
241
|
|
||||
Total
|
$
|
(65,964
|
)
|
|
$
|
(3,599
|
)
|
|
$
|
(128,529
|
)
|
|
$
|
168,124
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Unrealized holding gains on available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment losses
|
$
|
(18,281
|
)
|
|
$
|
(2,851
|
)
|
|
$
|
(23,373
|
)
|
|
$
|
(3,858
|
)
|
Net realized investment gains, excluding other-than-temporary impairment losses
|
7,634
|
|
|
9,699
|
|
|
32,435
|
|
|
25,145
|
|
||||
Total before taxes
|
(10,647
|
)
|
|
6,848
|
|
|
9,062
|
|
|
21,287
|
|
||||
Income taxes
|
4,647
|
|
|
(1,858
|
)
|
|
(1,025
|
)
|
|
(5,535
|
)
|
||||
Reclassification of unrealized holding gains (losses), net of taxes
|
$
|
(6,000
|
)
|
|
$
|
4,990
|
|
|
$
|
8,037
|
|
|
$
|
15,752
|
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial pension loss:
|
|
|
|
|
|
|
|
||||||||
Underwriting, acquisition and insurance expenses
|
$
|
(594
|
)
|
|
$
|
(400
|
)
|
|
$
|
(1,759
|
)
|
|
$
|
(1,205
|
)
|
Income taxes
|
119
|
|
|
80
|
|
|
352
|
|
|
241
|
|
||||
Reclassification of net actuarial pension loss, net of taxes
|
$
|
(475
|
)
|
|
$
|
(320
|
)
|
|
$
|
(1,407
|
)
|
|
$
|
(964
|
)
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Underwriting profit
|
$
|
113,319
|
|
|
$
|
32,548
|
|
|
$
|
311,000
|
|
|
$
|
73,321
|
|
Net investment income
|
87,060
|
|
|
91,096
|
|
|
270,521
|
|
|
269,980
|
|
||||
Net realized investment gains (losses)
|
(14,707
|
)
|
|
4,195
|
|
|
(3,031
|
)
|
|
28,709
|
|
||||
Other revenues
|
306,736
|
|
|
249,988
|
|
|
817,151
|
|
|
630,242
|
|
||||
Amortization of intangible assets
|
(18,914
|
)
|
|
(13,505
|
)
|
|
(50,503
|
)
|
|
(40,992
|
)
|
||||
Other expenses
|
(290,749
|
)
|
|
(231,193
|
)
|
|
(763,986
|
)
|
|
(598,303
|
)
|
||||
Interest expense
|
(30,064
|
)
|
|
(29,648
|
)
|
|
(88,664
|
)
|
|
(89,136
|
)
|
||||
Income tax expense
|
(48,271
|
)
|
|
(26,657
|
)
|
|
(101,619
|
)
|
|
(68,355
|
)
|
||||
Net income attributable to noncontrolling interests
|
(1,891
|
)
|
|
(1,021
|
)
|
|
(5,989
|
)
|
|
(1,879
|
)
|
||||
Net income to shareholders
|
$
|
102,519
|
|
|
$
|
75,803
|
|
|
$
|
384,880
|
|
|
$
|
203,587
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
||||||||
Gross premium volume
|
$
|
1,158,364
|
|
|
$
|
1,096,450
|
|
|
$
|
3,676,623
|
|
|
$
|
3,799,585
|
|
|
Net written premiums
|
953,184
|
|
|
881,781
|
|
|
3,022,958
|
|
|
3,105,423
|
|
|
||||
Net retention
|
82
|
%
|
|
80
|
%
|
|
82
|
%
|
|
82
|
%
|
|
||||
Earned premiums
|
963,675
|
|
|
954,007
|
|
|
2,864,882
|
|
|
2,868,981
|
|
|
||||
Losses and loss adjustment expenses
|
484,737
|
|
|
570,966
|
|
|
1,467,926
|
|
|
1,723,675
|
|
|
||||
Underwriting, acquisition and insurance expenses
|
365,619
|
|
|
350,493
|
|
|
1,085,956
|
|
|
1,071,985
|
|
|
||||
Underwriting profit
|
113,319
|
|
|
32,548
|
|
|
311,000
|
|
|
73,321
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
U.S. GAAP Combined Ratios
(1)
|
|
|
|
|
|
|
|
|
||||||||
U.S. Insurance
|
90
|
%
|
|
95
|
%
|
|
89
|
%
|
|
97
|
%
|
|
||||
International Insurance
|
87
|
%
|
|
97
|
%
|
|
87
|
%
|
|
95
|
%
|
|
||||
Reinsurance
|
86
|
%
|
|
97
|
%
|
|
92
|
%
|
|
97
|
%
|
|
||||
Other Insurance (Discontinued Lines)
|
NM
|
|
(2)
|
NM
|
|
(2)
|
NM
|
|
(2)
|
NM
|
|
(2)
|
||||
Markel Corporation (Consolidated)
|
88
|
%
|
|
97
|
%
|
|
89
|
%
|
|
97
|
%
|
|
(1)
|
The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums. A combined ratio less than 100% indicates an underwriting profit, while a combined ratio greater than 100% reflects an underwriting loss. The U.S. GAAP combined ratio is the sum of the loss ratio and the expense ratio.The loss ratio represents the relationship of incurred losses and loss adjustment expenses to earned premiums. The expense ratio represents the relationship of underwriting, acquisition and insurance expenses to earned premiums.
|
(2)
|
NM – Ratio is not meaningful.
|
•
|
The U.S. Insurance segment's combined ratio for the quarter ended September 30, 2015 included $75.0 million of favorable development on prior years' loss reserves compared to $60.9 million for the same period in 2014. The increase in prior year redundancies in 2015 was driven by favorable prior year development in the Global Insurance division in 2015, primarily on our inland marine product line, compared to slightly adverse development in 2014. Favorable development on prior years' loss reserves experienced within the U.S. Insurance segment in 2015 occurred across several product lines, but was most significant on our casualty product lines on the 2013 and 2014 accident years. Favorable development on prior years' loss reserves in 2015 was partially offset by adverse development on our Program business across several accident years. The redundancies on prior years' loss reserves during 2014 were most significant on our casualty product lines across several accident years.
|
•
|
The decrease in the expense ratio for the quarter ended September 30, 2015 was due to higher earned premiums in our Specialty division, lower general expenses and higher ceding commissions, driven by more favorable ceding commission rates in 2015 compared to 2014.
|
•
|
The decrease in the current accident year loss ratio for the nine months ended September 30, 2015 was driven by lower attritional losses within each of our divisions, across several product lines.
|
•
|
The U.S. Insurance segment's combined ratio for the nine months ended September 30, 2015 included $211.2 million of favorable development on prior years' loss reserves compared to $142.4 million for the same period in 2014. The increase in prior year redundancies in 2015 was due in part to an increase in the confidence level of our consolidated net reserves for unpaid losses and loss adjustment expenses during the first quarter of 2015, which resulted in a $36.0 million reduction to consolidated prior years' loss reserves, of which $19.0 million was in the U.S. Insurance segment (approximately one point on the segment combined ratio). We also experienced favorable development on prior years' loss reserves in our Global Insurance division in 2015, primarily on our inland marine product line, compared to adverse development in 2014. Other favorable development on prior years' loss reserves experienced within the U.S. Insurance segment during 2015 was most significant on our casualty lines, across several accident years, and on our brokerage property and workers' compensation product lines, primarily on the 2011 to 2014 accident years. In 2014, the redundancies on prior years' loss reserves were most significant on our casualty product lines across several accident years. Favorable development on our casualty product lines in 2014 was partially offset by $17.6 million of adverse development on our architects and engineers product line, primarily on the 2008 through 2013 accident years.
|
•
|
The decrease in the expense ratio for the nine months ended September 30, 2015 was primarily due to higher earned premiums in our Specialty division and lower general expenses.
|
•
|
The decrease in the current accident year loss ratio was driven by lower property losses in 2015 compared to 2014.
|
•
|
The International Insurance segment's combined ratio for the quarter ended September 30, 2015 included $57.9 million of favorable development on prior years' loss reserves compared to $30.8 million in 2014. In both 2014 and 2015, the favorable development on prior years' loss reserves was most significant on our professional liability, general liability and marine and energy product lines. In 2015, favorable development on prior years' loss reserves was most significant on the 2012 through 2014 accident years. In 2014, favorable development on prior years' loss reserves was most significant on the 2010 through 2012 accident years. The increase in prior year redundancies in the third quarter of 2015 compared to the third quarter of 2014 was driven by more favorable development on our general liability, professional liability and property product lines.
|
•
|
The increase in the expense ratio was due to higher profit sharing costs and higher commissions, due to changes in mix of business, partially offset by the impact of higher earned premiums in 2015 compared to 2014.
|
•
|
The International Insurance segment's combined ratio for the nine months ended September 30, 2015 included $177.9 million of favorable development on prior years' loss reserves compared to $102.7 million in 2014. The increase in prior year redundancies in 2015 was due in part to an increase in the confidence level of our consolidated net reserves for unpaid losses and loss adjustment expenses during the first quarter of 2015, which resulted in a $36.0 million reduction to consolidated prior years' loss reserves, of which $17.0 million was in the International Insurance segment (approximately three points on the segment combined ratio). We also experienced more favorable prior year development on our marine and energy product lines in 2015 compared to 2014 and favorable prior year development in the Global Insurance division in 2015, compared to slightly adverse development in 2014. In 2015, favorable development in our Global Insurance division was driven by reductions in case reserves for losses and loss adjustment expenses on a small number of large general liability and professional liability claims. For the nine months ended September 30, 2015, the favorable development on prior years' loss reserves occurred across several product lines, primarily on the 2012 to 2014 accident years. Prior year redundancies in both 2014 and 2015 were most significant on our marine and energy, professional liability and general liability product lines. The favorable development on prior years' loss reserves in 2014 was primarily on the 2006 to 2012 accident years.
|
•
|
The increase in the expense ratio was due to higher profit sharing costs, higher general expenses and lower earned premiums in 2015 compared to 2014.
|
•
|
The decrease in the current accident year loss ratio was driven by lower attritional losses in 2015 compared to 2014, due in part to lower property losses in our Global Reinsurance division.
|
•
|
The Reinsurance segment's combined ratio for the quarter ended September 30, 2015 included $24.2 million of favorable development on prior years' loss reserves compared to $8.3 million in 2014. The favorable development on prior years' loss reserves in 2015 was most significant on our short-tail property lines of business, on the 2013 and 2014 accident years. For financial reporting purposes, development on pre-acquisition accident years' loss reserves attributable to business previously written by Alterra Capital Holdings Limited (Alterra) is included in the 2013 accident year. The favorable development on prior years' loss reserves in 2014 was primarily on our property lines on the 2012 and 2013 accident years.
|
•
|
The increase in the expense ratio is due to higher commissions and lower earned premiums in 2015 compared to 2014.
|
•
|
The decrease in the current accident year loss ratio for the nine months ended September 30, 2015 was driven by lower property losses in 2015 compared to 2014.
|
•
|
The Reinsurance segment's combined ratio for the nine months ended September 30, 2015 included $65.7 million of favorable development on prior years' loss reserves compared to $49.8 million in 2014. The favorable development on prior years' loss reserves in 2015 was most significant on our casualty and short-tail property lines of business, on the 2013 and 2014 accident years. The favorable development on prior years' loss reserves in 2014 was primarily on our property lines on the 2012 and 2013 accident years.
|
•
|
The increase in the expense ratio is due to higher commissions and lower earned premiums in 2015 compared to 2014.
|
Gross Premium Volume
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
U.S. Insurance
|
$
|
635,926
|
|
|
$
|
619,510
|
|
|
$
|
1,890,144
|
|
|
$
|
1,876,114
|
|
International Insurance
|
284,576
|
|
|
271,045
|
|
|
911,962
|
|
|
924,401
|
|
||||
Reinsurance
|
239,094
|
|
|
206,125
|
|
|
875,676
|
|
|
999,036
|
|
||||
Other Insurance (Discontinued Lines)
|
(1,232
|
)
|
|
(230
|
)
|
|
(1,159
|
)
|
|
34
|
|
||||
Total
|
$
|
1,158,364
|
|
|
$
|
1,096,450
|
|
|
$
|
3,676,623
|
|
|
$
|
3,799,585
|
|
Net Written Premiums
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
U.S. Insurance
|
$
|
536,285
|
|
|
$
|
520,511
|
|
|
$
|
1,587,092
|
|
|
$
|
1,554,847
|
|
International Insurance
|
213,423
|
|
|
194,639
|
|
|
700,260
|
|
|
694,311
|
|
||||
Reinsurance
|
204,336
|
|
|
166,848
|
|
|
736,068
|
|
|
855,930
|
|
||||
Other Insurance (Discontinued Lines)
|
(860
|
)
|
|
(217
|
)
|
|
(462
|
)
|
|
335
|
|
||||
Total
|
$
|
953,184
|
|
|
$
|
881,781
|
|
|
$
|
3,022,958
|
|
|
$
|
3,105,423
|
|
Earned Premiums
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
U.S. Insurance
|
$
|
534,615
|
|
|
$
|
516,753
|
|
|
$
|
1,569,615
|
|
|
$
|
1,499,571
|
|
International Insurance
|
225,034
|
|
|
216,764
|
|
|
654,936
|
|
|
678,772
|
|
||||
Reinsurance
|
204,825
|
|
|
220,513
|
|
|
640,719
|
|
|
690,117
|
|
||||
Other Insurance (Discontinued Lines)
|
(799
|
)
|
|
(23
|
)
|
|
(388
|
)
|
|
521
|
|
||||
Total
|
$
|
963,675
|
|
|
$
|
954,007
|
|
|
$
|
2,864,882
|
|
|
$
|
2,868,981
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net investment income
|
$
|
87,060
|
|
|
$
|
91,096
|
|
|
$
|
270,521
|
|
|
$
|
269,980
|
|
Net realized investment gains (losses)
|
$
|
(14,707
|
)
|
|
$
|
4,195
|
|
|
$
|
(3,031
|
)
|
|
$
|
28,709
|
|
Change in net unrealized gains on investments
|
$
|
(210,186
|
)
|
|
$
|
(16,121
|
)
|
|
$
|
(396,855
|
)
|
|
$
|
498,836
|
|
Investment yield
(1)
|
0.6
|
%
|
|
0.6
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
||||
Taxable equivalent total investment return, before foreign currency effect
(2)
|
|
|
|
|
(0.3
|
)%
|
|
5.2
|
%
|
||||||
Taxable equivalent total investment return
(2)
|
|
|
|
|
(1.2
|
)%
|
|
4.2
|
%
|
(1)
|
Investment yield reflects net investment income as a percentage of monthly average invested assets at amortized cost.
|
(2)
|
Taxable equivalent total investment return is only analyzed on a year to date basis.
|
(1)
|
Investment yield reflects net investment income as a percentage of monthly average invested assets at amortized cost.
|
(2)
|
Adjustment to tax-exempt interest and dividend income to reflect a taxable equivalent basis.
|
(3)
|
Adjustment to reflect the impact of changes in foreign currency exchange rates and time-weighting the inputs to the calculation of taxable equivalent total investment return.
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Operating revenues
|
$
|
299,155
|
|
|
$
|
240,057
|
|
|
$
|
784,151
|
|
|
$
|
594,905
|
|
Net income to shareholders
|
$
|
6,398
|
|
|
$
|
11,166
|
|
|
$
|
14,354
|
|
|
$
|
16,310
|
|
EBITDA
|
$
|
29,502
|
|
|
$
|
31,061
|
|
|
$
|
76,271
|
|
|
$
|
66,118
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Markel Ventures EBITDA - Manufacturing
|
$
|
26,410
|
|
|
$
|
23,024
|
|
|
$
|
62,504
|
|
|
$
|
46,355
|
|
Markel Ventures EBITDA - Non-Manufacturing
|
3,092
|
|
|
8,037
|
|
|
13,767
|
|
|
19,763
|
|
||||
Markel Ventures EBITDA - Total
|
29,502
|
|
|
31,061
|
|
|
76,271
|
|
|
66,118
|
|
||||
Interest expense
(1)
|
(3,404
|
)
|
|
(3,629
|
)
|
|
(10,272
|
)
|
|
(8,392
|
)
|
||||
Income tax expense
|
(4,308
|
)
|
|
(4,954
|
)
|
|
(9,339
|
)
|
|
(9,417
|
)
|
||||
Depreciation expense
|
(8,715
|
)
|
|
(6,342
|
)
|
|
(22,957
|
)
|
|
(17,493
|
)
|
||||
Amortization of intangible assets
|
(6,677
|
)
|
|
(4,970
|
)
|
|
(19,349
|
)
|
|
(14,506
|
)
|
||||
Markel Ventures net income to shareholders
|
6,398
|
|
|
11,166
|
|
|
14,354
|
|
|
16,310
|
|
||||
Net income from other Markel operations
|
96,121
|
|
|
64,637
|
|
|
370,526
|
|
|
187,277
|
|
||||
Net income to shareholders
|
$
|
102,519
|
|
|
$
|
75,803
|
|
|
$
|
384,880
|
|
|
$
|
203,587
|
|
(1)
|
Interest expense for the quarters ended
September 30, 2015
and
2014
includes intercompany interest expense of
$2.1 million
and
$2.6 million
, respectively. Interest expense for the
nine
months ended
September 30, 2015
and
2014
includes intercompany interest expense of
$7.2 million
and
$5.8 million
, respectively.
|
•
|
our anticipated premium volume is based on current knowledge and assumes no significant man-made or natural catastrophes, no significant changes in products or personnel and no adverse changes in market conditions;
|
•
|
the effect of cyclical trends, including demand and pricing in the insurance and reinsurance markets;
|
•
|
actions by competitors, including consolidation, and the effect of competition on market trends and pricing;
|
•
|
we offer insurance and reinsurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses;
|
•
|
the frequency and severity of man-made and natural catastrophes (including earthquakes and weather-related catastrophes) may exceed expectations, are unpredictable and, in the case of weather-related catastrophes, may be exacerbated if, as many forecast, conditions in the oceans and atmosphere result in increased hurricane, flood, drought or other adverse weather-related activity;
|
•
|
emerging claim and coverage issues, changing legal and social trends, and inherent uncertainties (including but not limited to those uncertainties associated with our A&E reserves) in the loss estimation process can adversely impact the adequacy of our loss reserves and our allowance for reinsurance recoverables;
|
•
|
reinsurance reserves are subject to greater uncertainty than insurance reserves, primarily because of reliance upon the original underwriting decisions made by ceding companies and the longer lapse of time from the occurrence of loss events to their reporting to the reinsurer for ultimate resolution;
|
•
|
changes in the assumptions and estimates used in establishing reserves for our life and annuity reinsurance book (which is in runoff), for example, changes in assumptions and estimates of mortality, longevity, morbidity and interest rates, could result in material increases in our estimated loss reserves for such business;
|
•
|
adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves;
|
•
|
the failure or inadequacy of any loss limitation methods we employ;
|
•
|
changes in the availability, costs and quality of reinsurance coverage, which may impact our ability to write or continue to write certain lines of business;
|
•
|
industry and economic conditions, deterioration in reinsurer credit quality and coverage disputes can affect the ability or willingness of reinsurers to pay balances due;
|
•
|
after the commutation of ceded reinsurance contracts, any subsequent adverse development in the re-assumed loss reserves will result in a charge to earnings;
|
•
|
regulatory actions can impede our ability to charge adequate rates and efficiently allocate capital;
|
•
|
economic conditions, actual or potential defaults in sovereign debt obligations, volatility in interest and foreign currency exchange rates and changes in market value of concentrated investments can have a significant impact on the fair value of our fixed maturities and equity securities, as well as the carrying value of our other assets and liabilities, and this impact may be heightened by market volatility;
|
•
|
a number of factors may adversely affect the markets served by our Markel Ventures operations and negatively impact their revenues and profitability, including, among others: economic conditions; changes in government support for education, healthcare and infrastructure projects; changes in capital spending levels; changes in the housing market; and volatility in interest and foreign currency exchange rates;
|
•
|
economic conditions may adversely affect our access to capital and credit markets;
|
•
|
we have substantial investments in municipal bonds (approximately
$4.0 billion
at
September 30, 2015
) and, although less than 15% of our municipal bond portfolio is tied to any one state, widespread defaults could adversely affect our results of operations and financial condition;
|
•
|
the impacts of periods of slow economic growth; the continuing effects of government intervention into the markets to address financial downturns (including, among other things, the effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations adopted thereunder); the outcome of economic and currency concerns in the Eurozone; material changes to the monetary policies of central banks, including the U.S. Federal Reserve and the European Central Bank; and the combined impact of the foregoing on our industry, business and investment portfolio;
|
•
|
the impacts that the political and civil unrest in Ukraine and related sanctions imposed on Russia by the U.S. and other Western European governments may have on our businesses and the markets they serve or that any disruption in European or worldwide economic conditions generally arising from this situation may have on our business, industry or investment portfolio;
|
•
|
the impacts that the Israeli-Palestinian conflict may have on our businesses and the markets they serve or that any disruptions in Middle Eastern or worldwide economic conditions generally arising from this conflict may have on our business, industry or investment portfolio;
|
•
|
the impacts that health epidemics and pandemics may have on our business operations and claims activity;
|
•
|
the impact of the implementation of U.S. health care reform legislation and regulations under that legislation on our business;
|
•
|
our business is dependent upon the successful functioning and security of our computer systems; if our information technology systems fail or suffer a security breach, our business or reputation could be adversely impacted;
|
•
|
our acquisition of insurance and non-insurance businesses may increase our operational and control risks for a period of time;
|
•
|
we may not realize the contemplated benefits, including cost savings and synergies, of our acquisitions;
|
•
|
any determination requiring the write-off of a significant portion of our goodwill and intangible assets;
|
•
|
the loss of services of any executive officer or other key personnel could adversely impact one or more of our operations;
|
•
|
our expanding international operations expose us to increased investment, political and economic risks, including foreign currency exchange rate and credit risk;
|
•
|
the effectiveness of our procedures for compliance with existing and ever increasing guidelines, policies and legal and regulatory standards, rules, laws and regulations; and
|
•
|
adverse changes in our assigned financial strength or debt ratings could adversely impact our ability to attract and retain business or obtain capital.
|
|
Markel Corporation
|
|
|
|
|
|
By:
|
/s/ Alan I. Kirshner
|
|
|
Alan I. Kirshner
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
By:
|
/s/ Anne G. Waleski
|
|
|
Anne G. Waleski
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
*
|
Filed with this report.
|
a.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on May 13, 2011.
|
b.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on November 18, 2011.
|
c.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on June 5, 2001.
|
d.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on August 11, 2004.
|
e.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on September 21, 2009.
|
f.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on May 31, 2011.
|
g.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on June 29, 2012.
|
h.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on March 7, 2013.
|
i.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended June 30, 2013.
|
j.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended June 30, 2014.
|
/s/ Steven A. Markel
|
|
MARKEL CORPORATION
|
|
|
Executive
|
|
|
|
|
|
|
By:
|
/s/ Alan I. Kirshner
|
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Markel Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
November 4, 2015
|
|
/s/ Alan I. Kirshner
|
|
|
Alan I. Kirshner
|
|
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Markel Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
November 4, 2015
|
|
/s/ Anne G. Waleski
|
|
|
Anne G. Waleski
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Alan I. Kirshner
|
|
Alan I. Kirshner
|
|
Chairman and Chief Executive Officer
|
|
November 4, 2015
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Anne G. Waleski
|
|
Anne G. Waleski
|
|
Executive Vice President and Chief Financial Officer
|
|
November 4, 2015
|
|