|
x
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2018
|
¨
|
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
|
|
Emerging growth 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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June 30,
2018 |
|
December 31,
2017 |
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Investments, at estimated fair value:
|
|
|
|
||||
Fixed maturities, available-for-sale (amortized cost of $10,025,593 in 2018 and $9,551,153 in 2017)
|
$
|
10,134,073
|
|
|
$
|
9,940,670
|
|
Equity securities, available-for-sale (cost of $2,667,661 in 2017)
|
—
|
|
|
5,967,847
|
|
||
Equity securities (cost of $2,787,763 in 2018)
|
6,069,245
|
|
|
—
|
|
||
Short-term investments, available-for-sale (estimated fair value approximates cost)
|
1,947,585
|
|
|
2,160,974
|
|
||
Total Investments
|
18,150,903
|
|
|
18,069,491
|
|
||
Cash and cash equivalents
|
1,945,370
|
|
|
2,198,459
|
|
||
Restricted cash and cash equivalents
|
299,026
|
|
|
302,387
|
|
||
Receivables
|
1,944,751
|
|
|
1,567,453
|
|
||
Reinsurance recoverable on unpaid losses
|
4,739,259
|
|
|
4,619,336
|
|
||
Reinsurance recoverable on paid losses
|
90,649
|
|
|
126,054
|
|
||
Deferred policy acquisition costs
|
508,214
|
|
|
465,569
|
|
||
Prepaid reinsurance premiums
|
1,266,916
|
|
|
1,099,757
|
|
||
Goodwill
|
1,784,667
|
|
|
1,777,464
|
|
||
Intangible assets
|
1,269,520
|
|
|
1,355,681
|
|
||
Other assets
|
1,247,756
|
|
|
1,223,365
|
|
||
Total Assets
|
$
|
33,247,031
|
|
|
$
|
32,805,016
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
$
|
13,628,941
|
|
|
$
|
13,584,281
|
|
Life and annuity benefits
|
1,033,461
|
|
|
1,072,112
|
|
||
Unearned premiums
|
3,695,040
|
|
|
3,308,779
|
|
||
Payables to insurance and reinsurance companies
|
422,423
|
|
|
324,304
|
|
||
Senior long-term debt and other debt (estimated fair value of $3,088,000 in 2018 and $3,351,000 in 2017)
|
3,024,306
|
|
|
3,099,230
|
|
||
Other liabilities
|
1,809,448
|
|
|
1,748,460
|
|
||
Total Liabilities
|
23,613,619
|
|
|
23,137,166
|
|
||
Redeemable noncontrolling interests
|
155,998
|
|
|
166,269
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
||||
Common stock
|
3,387,121
|
|
|
3,381,834
|
|
||
Retained earnings
|
6,184,299
|
|
|
3,776,743
|
|
||
Accumulated other comprehensive income (loss)
|
(90,560
|
)
|
|
2,345,571
|
|
||
Total Shareholders' Equity
|
9,480,860
|
|
|
9,504,148
|
|
||
Noncontrolling interests
|
(3,446
|
)
|
|
(2,567
|
)
|
||
Total Equity
|
9,477,414
|
|
|
9,501,581
|
|
||
Total Liabilities and Equity
|
$
|
33,247,031
|
|
|
$
|
32,805,016
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||
OPERATING REVENUES
|
|
|
|
|
|
|
|
||||||||
Earned premiums
|
$
|
1,148,184
|
|
|
$
|
1,033,574
|
|
|
$
|
2,299,205
|
|
|
$
|
2,016,176
|
|
Net investment income
|
105,387
|
|
|
99,299
|
|
|
213,403
|
|
|
199,667
|
|
||||
Net investment gains (losses):
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment losses
|
—
|
|
|
(604
|
)
|
|
—
|
|
|
(3,817
|
)
|
||||
Net realized investment gains (losses), excluding other-than-temporary impairment losses
|
(7,642
|
)
|
|
4,829
|
|
|
(8,588
|
)
|
|
20,012
|
|
||||
Change in fair value of equity securities
|
112,891
|
|
|
13,402
|
|
|
(9,161
|
)
|
|
22,297
|
|
||||
Net investment gains (losses)
|
105,249
|
|
|
17,627
|
|
|
(17,749
|
)
|
|
38,492
|
|
||||
Other revenues
|
628,193
|
|
|
330,993
|
|
|
1,067,625
|
|
|
638,909
|
|
||||
Total Operating Revenues
|
1,987,013
|
|
|
1,481,493
|
|
|
3,562,484
|
|
|
2,893,244
|
|
||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
||||||||
Losses and loss adjustment expenses
|
599,178
|
|
|
522,978
|
|
|
1,214,296
|
|
|
1,134,697
|
|
||||
Underwriting, acquisition and insurance expenses
|
451,570
|
|
|
401,270
|
|
|
875,960
|
|
|
774,548
|
|
||||
Amortization of intangible assets
|
29,641
|
|
|
18,026
|
|
|
58,464
|
|
|
34,796
|
|
||||
Other expenses
|
595,343
|
|
|
298,756
|
|
|
997,473
|
|
|
581,389
|
|
||||
Total Operating Expenses
|
1,675,732
|
|
|
1,241,030
|
|
|
3,146,193
|
|
|
2,525,430
|
|
||||
Operating Income
|
311,281
|
|
|
240,463
|
|
|
416,291
|
|
|
367,814
|
|
||||
Interest expense
|
36,702
|
|
|
31,797
|
|
|
76,761
|
|
|
65,199
|
|
||||
Net foreign exchange gains
|
(86,158
|
)
|
|
(879
|
)
|
|
(64,044
|
)
|
|
(974
|
)
|
||||
Income Before Income Taxes
|
360,737
|
|
|
209,545
|
|
|
403,574
|
|
|
303,589
|
|
||||
Income tax expense
|
81,150
|
|
|
58,118
|
|
|
189,581
|
|
|
81,122
|
|
||||
Net Income
|
279,587
|
|
|
151,427
|
|
|
213,993
|
|
|
222,467
|
|
||||
Net income attributable to noncontrolling interests
|
1,356
|
|
|
1,767
|
|
|
68
|
|
|
2,938
|
|
||||
Net Income to Shareholders
|
$
|
278,231
|
|
|
$
|
149,660
|
|
|
$
|
213,925
|
|
|
$
|
219,529
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gains on available-for-sale investments, net of taxes:
|
|
|
|
|
|
|
|
||||||||
Net holding gains (losses) arising during the period
|
$
|
(98,145
|
)
|
|
$
|
190,069
|
|
|
$
|
(215,067
|
)
|
|
$
|
350,349
|
|
Reclassification adjustments for net gains included in net income
|
(5,891
|
)
|
|
(222
|
)
|
|
(5,077
|
)
|
|
(9,391
|
)
|
||||
Change in net unrealized gains on available-for-sale investments, net of taxes
|
(104,036
|
)
|
|
189,847
|
|
|
(220,144
|
)
|
|
340,958
|
|
||||
Change in foreign currency translation adjustments, net of taxes
|
(10,450
|
)
|
|
1,962
|
|
|
(5,497
|
)
|
|
3,507
|
|
||||
Change in net actuarial pension loss, net of taxes
|
568
|
|
|
902
|
|
|
1,232
|
|
|
1,618
|
|
||||
Total Other Comprehensive Income (Loss)
|
(113,918
|
)
|
|
192,711
|
|
|
(224,409
|
)
|
|
346,083
|
|
||||
Comprehensive Income (Loss)
|
165,669
|
|
|
344,138
|
|
|
(10,416
|
)
|
|
568,550
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
1,333
|
|
|
1,781
|
|
|
87
|
|
|
2,954
|
|
||||
Comprehensive Income (Loss) to Shareholders
|
$
|
164,336
|
|
|
$
|
342,357
|
|
|
$
|
(10,503
|
)
|
|
$
|
565,596
|
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME PER SHARE
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
20.01
|
|
|
$
|
10.34
|
|
|
$
|
15.75
|
|
|
$
|
14.25
|
|
Diluted
|
$
|
19.97
|
|
|
$
|
10.31
|
|
|
$
|
15.72
|
|
|
$
|
14.20
|
|
(in thousands)
|
Common Shares
|
|
Common
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Shareholders'
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
|
Redeemable
Noncontrolling
Interests
|
|||||||||||||||
December 31, 2016
|
13,955
|
|
|
$
|
3,368,666
|
|
|
$
|
3,526,395
|
|
|
$
|
1,565,866
|
|
|
$
|
8,460,927
|
|
|
$
|
6,484
|
|
|
$
|
8,467,411
|
|
|
$
|
73,678
|
|
Net income (loss)
|
|
|
|
|
219,529
|
|
|
—
|
|
|
219,529
|
|
|
(307
|
)
|
|
219,222
|
|
|
3,245
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
—
|
|
|
346,067
|
|
|
346,067
|
|
|
—
|
|
|
346,067
|
|
|
16
|
|
|||||||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
565,596
|
|
|
(307
|
)
|
|
565,289
|
|
|
3,261
|
|
|||||||||||
Issuance of common stock
|
24
|
|
|
359
|
|
|
—
|
|
|
—
|
|
|
359
|
|
|
—
|
|
|
359
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(61
|
)
|
|
—
|
|
|
(59,194
|
)
|
|
—
|
|
|
(59,194
|
)
|
|
—
|
|
|
(59,194
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
10,568
|
|
|
—
|
|
|
—
|
|
|
10,568
|
|
|
—
|
|
|
10,568
|
|
|
—
|
|
|||||||
Adjustment of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(20,284
|
)
|
|
—
|
|
|
(20,284
|
)
|
|
—
|
|
|
(20,284
|
)
|
|
20,284
|
|
|||||||
Purchase of noncontrolling interest
|
—
|
|
|
(2,910
|
)
|
|
—
|
|
|
—
|
|
|
(2,910
|
)
|
|
(8,109
|
)
|
|
(11,019
|
)
|
|
(6,179
|
)
|
|||||||
Other
|
—
|
|
|
(453
|
)
|
|
(200
|
)
|
|
—
|
|
|
(653
|
)
|
|
39
|
|
|
(614
|
)
|
|
(4,353
|
)
|
|||||||
June 30, 2017
|
13,918
|
|
|
$
|
3,376,230
|
|
|
$
|
3,666,246
|
|
|
$
|
1,911,933
|
|
|
$
|
8,954,409
|
|
|
$
|
(1,893
|
)
|
|
$
|
8,952,516
|
|
|
$
|
86,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
December 31, 2017
|
13,904
|
|
|
$
|
3,381,834
|
|
|
$
|
3,776,743
|
|
|
$
|
2,345,571
|
|
|
$
|
9,504,148
|
|
|
$
|
(2,567
|
)
|
|
$
|
9,501,581
|
|
|
$
|
166,269
|
|
Cumulative effect of adoption of ASU No. 2014-09, net of taxes
|
—
|
|
|
—
|
|
|
325
|
|
|
—
|
|
|
325
|
|
|
—
|
|
|
325
|
|
|
—
|
|
|||||||
Cumulative effect of adoption of ASU No. 2016-01, net of taxes
|
—
|
|
|
—
|
|
|
2,613,242
|
|
|
(2,613,242
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Cumulative effect of adoption of ASU No. 2018-02
|
—
|
|
|
—
|
|
|
(401,539
|
)
|
|
401,539
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Net income (loss)
|
|
|
|
|
213,925
|
|
|
—
|
|
|
213,925
|
|
|
(910
|
)
|
|
213,015
|
|
|
978
|
|
|||||||||
Other comprehensive income (loss)
|
|
|
|
|
—
|
|
|
(224,428
|
)
|
|
(224,428
|
)
|
|
—
|
|
|
(224,428
|
)
|
|
19
|
|
|||||||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
(10,178
|
)
|
|
(910
|
)
|
|
(11,088
|
)
|
|
997
|
|
|||||||||||
Issuance of common stock
|
4
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(22
|
)
|
|
—
|
|
|
(24,257
|
)
|
|
—
|
|
|
(24,257
|
)
|
|
—
|
|
|
(24,257
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
12,229
|
|
|
—
|
|
|
—
|
|
|
12,229
|
|
|
—
|
|
|
12,229
|
|
|
—
|
|
|||||||
Adjustment of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
5,414
|
|
|
—
|
|
|
5,414
|
|
|
—
|
|
|
5,414
|
|
|
(5,414
|
)
|
|||||||
Purchase of noncontrolling interest
|
—
|
|
|
(5,586
|
)
|
|
—
|
|
|
—
|
|
|
(5,586
|
)
|
|
—
|
|
|
(5,586
|
)
|
|
(39
|
)
|
|||||||
Other
|
—
|
|
|
(1,358
|
)
|
|
446
|
|
|
—
|
|
|
(912
|
)
|
|
31
|
|
|
(881
|
)
|
|
(5,815
|
)
|
|||||||
June 30, 2018
|
13,886
|
|
|
$
|
3,387,121
|
|
|
$
|
6,184,299
|
|
|
$
|
(90,560
|
)
|
|
$
|
9,480,860
|
|
|
$
|
(3,446
|
)
|
|
$
|
9,477,414
|
|
|
$
|
155,998
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(dollars in thousands)
|
||||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
213,993
|
|
|
$
|
222,467
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
93,541
|
|
|
15,478
|
|
||
Net Cash Provided By Operating Activities
|
307,534
|
|
|
237,945
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Proceeds from sales of fixed maturities and equity securities
|
234,442
|
|
|
262,518
|
|
||
Proceeds from maturities, calls and prepayments of fixed maturities
|
374,719
|
|
|
676,023
|
|
||
Cost of fixed maturities and equity securities purchased
|
(1,185,375
|
)
|
|
(939,314
|
)
|
||
Net change in short-term investments
|
220,428
|
|
|
677,968
|
|
||
Additions to property and equipment
|
(52,388
|
)
|
|
(35,578
|
)
|
||
Acquisitions, net of cash acquired
|
(7,804
|
)
|
|
(202,033
|
)
|
||
Other
|
(29,661
|
)
|
|
(2,808
|
)
|
||
Net Cash Provided (Used) By Investing Activities
|
(445,639
|
)
|
|
436,776
|
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Additions to senior long-term debt and other debt
|
109,113
|
|
|
29,898
|
|
||
Repayment of senior long-term debt and other debt
|
(180,158
|
)
|
|
(139,564
|
)
|
||
Repurchases of common stock
|
(24,257
|
)
|
|
(59,194
|
)
|
||
Purchase of noncontrolling interests
|
(7,058
|
)
|
|
(18,068
|
)
|
||
Distributions to noncontrolling interests
|
(5,815
|
)
|
|
(4,345
|
)
|
||
Other
|
(3,288
|
)
|
|
(7,346
|
)
|
||
Net Cash Used By Financing Activities
|
(111,463
|
)
|
|
(198,619
|
)
|
||
Effect of foreign currency rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
(6,882
|
)
|
|
24,977
|
|
||
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
|
(256,450
|
)
|
|
501,079
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
2,500,846
|
|
|
2,085,164
|
|
||
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD
|
$
|
2,244,396
|
|
|
$
|
2,586,243
|
|
•
|
ASU No. 2016-16,
Income Taxes (Topic 740): Intra-entity Transfers of Assets Other Than Inventory
|
•
|
ASU No. 2017-07,
Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
|
•
|
ASU No. 2017-09,
Stock Compensation (Topic 718): Scope of Modification Accounting
|
•
|
ASU No. 2017-08,
Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities
|
(dollars in thousands)
|
Amount
|
|
Economic
Useful Life
|
||
Customer relationships
|
$
|
289,000
|
|
|
13 years
|
Trade names
|
22,500
|
|
|
13 years
|
|
Technology
|
27,000
|
|
|
Nine years
|
|
Insurance licenses
|
32,000
|
|
|
Indefinite
|
|
Intangible assets, before amortization, as of the acquisition date
|
370,500
|
|
|
|
|
Amortization (from the acquisition date through June 30, 2018)
|
18,478
|
|
|
|
|
Net intangible assets as of June 30, 2018
|
$
|
352,022
|
|
|
|
|
June 30, 2018
|
||||||||||||||||||
(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
|
$
|
184,972
|
|
|
$
|
23
|
|
|
$
|
(2,797
|
)
|
|
$
|
—
|
|
|
$
|
182,198
|
|
U.S. government-sponsored enterprises
|
360,192
|
|
|
5,719
|
|
|
(5,544
|
)
|
|
—
|
|
|
360,367
|
|
|||||
Obligations of states, municipalities and political subdivisions
|
4,379,175
|
|
|
107,644
|
|
|
(33,843
|
)
|
|
—
|
|
|
4,452,976
|
|
|||||
Foreign governments
|
1,454,335
|
|
|
113,963
|
|
|
(12,188
|
)
|
|
—
|
|
|
1,556,110
|
|
|||||
Commercial mortgage-backed securities
|
1,668,547
|
|
|
668
|
|
|
(58,319
|
)
|
|
—
|
|
|
1,610,896
|
|
|||||
Residential mortgage-backed securities
|
910,466
|
|
|
2,564
|
|
|
(20,875
|
)
|
|
—
|
|
|
892,155
|
|
|||||
Asset-backed securities
|
30,229
|
|
|
1
|
|
|
(455
|
)
|
|
—
|
|
|
29,775
|
|
|||||
Corporate bonds
|
1,037,677
|
|
|
25,776
|
|
|
(13,857
|
)
|
|
—
|
|
|
1,049,596
|
|
|||||
Total fixed maturities
|
10,025,593
|
|
|
256,358
|
|
|
(147,878
|
)
|
|
—
|
|
|
10,134,073
|
|
|||||
Short-term investments
|
1,948,806
|
|
|
203
|
|
|
(1,424
|
)
|
|
—
|
|
|
1,947,585
|
|
|||||
Investments, available-for-sale
|
$
|
11,974,399
|
|
|
$
|
256,561
|
|
|
$
|
(149,302
|
)
|
|
$
|
—
|
|
|
$
|
12,081,658
|
|
|
December 31, 2017
|
||||||||||||||||||
(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
|
$
|
162,378
|
|
|
$
|
54
|
|
|
$
|
(1,819
|
)
|
|
$
|
—
|
|
|
$
|
160,613
|
|
U.S. government-sponsored enterprises
|
352,455
|
|
|
11,883
|
|
|
(818
|
)
|
|
—
|
|
|
363,520
|
|
|||||
Obligations of states, municipalities and political subdivisions
|
4,381,358
|
|
|
193,120
|
|
|
(7,916
|
)
|
|
—
|
|
|
4,566,562
|
|
|||||
Foreign governments
|
1,341,628
|
|
|
150,010
|
|
|
(2,410
|
)
|
|
—
|
|
|
1,489,228
|
|
|||||
Commercial mortgage-backed securities
|
1,244,777
|
|
|
6,108
|
|
|
(16,559
|
)
|
|
—
|
|
|
1,234,326
|
|
|||||
Residential mortgage-backed securities
|
846,916
|
|
|
14,115
|
|
|
(4,863
|
)
|
|
—
|
|
|
856,168
|
|
|||||
Asset-backed securities
|
34,942
|
|
|
8
|
|
|
(222
|
)
|
|
—
|
|
|
34,728
|
|
|||||
Corporate bonds
|
1,186,699
|
|
|
51,563
|
|
|
(2,737
|
)
|
|
—
|
|
|
1,235,525
|
|
|||||
Total fixed maturities
|
9,551,153
|
|
|
426,861
|
|
|
(37,344
|
)
|
|
—
|
|
|
9,940,670
|
|
|||||
Equity securities:
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance, banks and other financial institutions
|
899,324
|
|
|
1,209,162
|
|
|
(5,453
|
)
|
|
—
|
|
|
2,103,033
|
|
|||||
Industrial, consumer and all other
|
1,768,337
|
|
|
2,110,959
|
|
|
(14,482
|
)
|
|
—
|
|
|
3,864,814
|
|
|||||
Total equity securities
|
2,667,661
|
|
|
3,320,121
|
|
|
(19,935
|
)
|
|
—
|
|
|
5,967,847
|
|
|||||
Short-term investments
|
2,161,017
|
|
|
26
|
|
|
(69
|
)
|
|
—
|
|
|
2,160,974
|
|
|||||
Investments, available-for-sale
|
$
|
14,379,831
|
|
|
$
|
3,747,008
|
|
|
$
|
(57,348
|
)
|
|
$
|
—
|
|
|
$
|
18,069,491
|
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See note 2.
|
|
June 30, 2018
|
||||||||||||||||||||||
|
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
|
$
|
102,764
|
|
|
$
|
(1,397
|
)
|
|
$
|
78,840
|
|
|
$
|
(1,400
|
)
|
|
$
|
181,604
|
|
|
$
|
(2,797
|
)
|
U.S. government-sponsored enterprises
|
115,354
|
|
|
(2,714
|
)
|
|
94,301
|
|
|
(2,830
|
)
|
|
209,655
|
|
|
(5,544
|
)
|
||||||
Obligations of states, municipalities and political subdivisions
|
855,186
|
|
|
(15,141
|
)
|
|
402,553
|
|
|
(18,702
|
)
|
|
1,257,739
|
|
|
(33,843
|
)
|
||||||
Foreign governments
|
328,049
|
|
|
(6,714
|
)
|
|
75,799
|
|
|
(5,474
|
)
|
|
403,848
|
|
|
(12,188
|
)
|
||||||
Commercial mortgage-backed securities
|
962,732
|
|
|
(24,757
|
)
|
|
497,169
|
|
|
(33,562
|
)
|
|
1,459,901
|
|
|
(58,319
|
)
|
||||||
Residential mortgage-backed securities
|
590,710
|
|
|
(14,181
|
)
|
|
126,355
|
|
|
(6,694
|
)
|
|
717,065
|
|
|
(20,875
|
)
|
||||||
Asset-backed securities
|
14,389
|
|
|
(277
|
)
|
|
14,316
|
|
|
(178
|
)
|
|
28,705
|
|
|
(455
|
)
|
||||||
Corporate bonds
|
401,878
|
|
|
(9,366
|
)
|
|
153,196
|
|
|
(4,491
|
)
|
|
555,074
|
|
|
(13,857
|
)
|
||||||
Total fixed maturities
|
3,371,062
|
|
|
(74,547
|
)
|
|
1,442,529
|
|
|
(73,331
|
)
|
|
4,813,591
|
|
|
(147,878
|
)
|
||||||
Short-term investments
|
177,977
|
|
|
(1,424
|
)
|
|
—
|
|
|
—
|
|
|
177,977
|
|
|
(1,424
|
)
|
||||||
Total
|
$
|
3,549,039
|
|
|
$
|
(75,971
|
)
|
|
$
|
1,442,529
|
|
|
$
|
(73,331
|
)
|
|
$
|
4,991,568
|
|
|
$
|
(149,302
|
)
|
|
December 31, 2017
|
||||||||||||||||||||||
|
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
|
$
|
78,756
|
|
|
$
|
(659
|
)
|
|
$
|
78,298
|
|
|
$
|
(1,160
|
)
|
|
$
|
157,054
|
|
|
$
|
(1,819
|
)
|
U.S. government-sponsored enterprises
|
11,593
|
|
|
(79
|
)
|
|
89,194
|
|
|
(739
|
)
|
|
100,787
|
|
|
(818
|
)
|
||||||
Obligations of states, municipalities and political subdivisions
|
80,654
|
|
|
(789
|
)
|
|
404,814
|
|
|
(7,127
|
)
|
|
485,468
|
|
|
(7,916
|
)
|
||||||
Foreign governments
|
31,752
|
|
|
(452
|
)
|
|
63,406
|
|
|
(1,958
|
)
|
|
95,158
|
|
|
(2,410
|
)
|
||||||
Commercial mortgage-backed securities
|
253,936
|
|
|
(1,980
|
)
|
|
481,216
|
|
|
(14,579
|
)
|
|
735,152
|
|
|
(16,559
|
)
|
||||||
Residential mortgage-backed securities
|
157,508
|
|
|
(1,345
|
)
|
|
148,960
|
|
|
(3,518
|
)
|
|
306,468
|
|
|
(4,863
|
)
|
||||||
Asset-backed securities
|
14,263
|
|
|
(123
|
)
|
|
15,165
|
|
|
(99
|
)
|
|
29,428
|
|
|
(222
|
)
|
||||||
Corporate bonds
|
149,345
|
|
|
(863
|
)
|
|
187,754
|
|
|
(1,874
|
)
|
|
337,099
|
|
|
(2,737
|
)
|
||||||
Total fixed maturities
|
777,807
|
|
|
(6,290
|
)
|
|
1,468,807
|
|
|
(31,054
|
)
|
|
2,246,614
|
|
|
(37,344
|
)
|
||||||
Equity securities:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance, banks and other financial institutions
|
60,848
|
|
|
(4,843
|
)
|
|
1,291
|
|
|
(610
|
)
|
|
62,139
|
|
|
(5,453
|
)
|
||||||
Industrial, consumer and all other
|
78,552
|
|
|
(11,798
|
)
|
|
11,243
|
|
|
(2,684
|
)
|
|
89,795
|
|
|
(14,482
|
)
|
||||||
Total equity securities
|
139,400
|
|
|
(16,641
|
)
|
|
12,534
|
|
|
(3,294
|
)
|
|
151,934
|
|
|
(19,935
|
)
|
||||||
Short-term investments
|
369,104
|
|
|
(69
|
)
|
|
—
|
|
|
—
|
|
|
369,104
|
|
|
(69
|
)
|
||||||
Total
|
$
|
1,286,311
|
|
|
$
|
(23,000
|
)
|
|
$
|
1,481,341
|
|
|
$
|
(34,348
|
)
|
|
$
|
2,767,652
|
|
|
$
|
(57,348
|
)
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See note 2.
|
(dollars in thousands)
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
222,476
|
|
|
$
|
221,579
|
|
Due after one year through five years
|
1,354,381
|
|
|
1,366,516
|
|
||
Due after five years through ten years
|
1,845,977
|
|
|
1,876,279
|
|
||
Due after ten years
|
3,993,517
|
|
|
4,136,873
|
|
||
|
7,416,351
|
|
|
7,601,247
|
|
||
Commercial mortgage-backed securities
|
1,668,547
|
|
|
1,610,896
|
|
||
Residential mortgage-backed securities
|
910,466
|
|
|
892,155
|
|
||
Asset-backed securities
|
30,229
|
|
|
29,775
|
|
||
Total fixed maturities
|
$
|
10,025,593
|
|
|
$
|
10,134,073
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest:
|
|
|
|
|
|
|
|
||||||||
Municipal bonds (tax-exempt)
|
$
|
20,287
|
|
|
$
|
22,758
|
|
|
$
|
41,222
|
|
|
$
|
45,130
|
|
Municipal bonds (taxable)
|
18,220
|
|
|
17,793
|
|
|
35,853
|
|
|
35,298
|
|
||||
Other taxable bonds
|
39,548
|
|
|
36,296
|
|
|
77,017
|
|
|
71,184
|
|
||||
Short-term investments, including overnight deposits
|
11,915
|
|
|
5,834
|
|
|
22,505
|
|
|
10,783
|
|
||||
Dividends on equity securities
|
20,474
|
|
|
19,017
|
|
|
44,481
|
|
|
39,623
|
|
||||
Income (loss) from equity method investments
|
(1,490
|
)
|
|
1,802
|
|
|
288
|
|
|
6,395
|
|
||||
Other
|
97
|
|
|
24
|
|
|
(13
|
)
|
|
(205
|
)
|
||||
|
109,051
|
|
|
103,524
|
|
|
221,353
|
|
|
208,208
|
|
||||
Investment expenses
|
(3,664
|
)
|
|
(4,225
|
)
|
|
(7,950
|
)
|
|
(8,541
|
)
|
||||
Net investment income
|
$
|
105,387
|
|
|
$
|
99,299
|
|
|
$
|
213,403
|
|
|
$
|
199,667
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Realized gains on available-for-sale investments:
|
|
|
|
|
|
|
|
||||||||
Sales of fixed maturities
|
$
|
242
|
|
|
$
|
554
|
|
|
$
|
1,765
|
|
|
$
|
757
|
|
Sales of equity securities
(1)
|
—
|
|
|
1,295
|
|
|
—
|
|
|
16,533
|
|
||||
Other
|
810
|
|
|
4,259
|
|
|
891
|
|
|
4,826
|
|
||||
Total realized gains
|
1,052
|
|
|
6,108
|
|
|
2,656
|
|
|
22,116
|
|
||||
Realized losses on available-for-sale investments:
|
|
|
|
|
|
|
|
||||||||
Sales of fixed maturities
|
(7,706
|
)
|
|
(412
|
)
|
|
(8,198
|
)
|
|
(602
|
)
|
||||
Sales of equity securities
(1)
|
—
|
|
|
(786
|
)
|
|
—
|
|
|
(1,216
|
)
|
||||
Other-than-temporary impairments
|
—
|
|
|
(604
|
)
|
|
—
|
|
|
(3,817
|
)
|
||||
Other
|
(988
|
)
|
|
(81
|
)
|
|
(3,046
|
)
|
|
(286
|
)
|
||||
Total realized losses
|
(8,694
|
)
|
|
(1,883
|
)
|
|
(11,244
|
)
|
|
(5,921
|
)
|
||||
Net realized investment gains (losses)
|
(7,642
|
)
|
|
4,225
|
|
|
(8,588
|
)
|
|
16,195
|
|
||||
Change in fair value of equity securities:
(1)
|
|
|
|
|
|
|
|
||||||||
Change in fair value of equity securities sold during the period
(1)
|
9,631
|
|
|
—
|
|
|
13,897
|
|
|
—
|
|
||||
Change in fair value of equity securities held at the end of the period
|
103,260
|
|
|
13,402
|
|
|
(23,058
|
)
|
|
22,297
|
|
||||
Change in fair value of equity securities
(1)
|
112,891
|
|
|
13,402
|
|
|
(9,161
|
)
|
|
22,297
|
|
||||
Net investment gains (losses)
|
$
|
105,249
|
|
|
$
|
17,627
|
|
|
$
|
(17,749
|
)
|
|
$
|
38,492
|
|
Change in net unrealized gains on available-for-sale investments included in other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
$
|
(143,593
|
)
|
|
$
|
79,413
|
|
|
$
|
(281,093
|
)
|
|
$
|
84,060
|
|
Equity securities
(1)
|
—
|
|
|
204,372
|
|
|
—
|
|
|
423,424
|
|
||||
Short-term investments
|
5,499
|
|
|
133
|
|
|
(1,178
|
)
|
|
6
|
|
||||
Net increase (decrease)
|
$
|
(138,094
|
)
|
|
$
|
283,918
|
|
|
$
|
(282,271
|
)
|
|
$
|
507,490
|
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income; rather, all changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2.
|
|
June 30, 2018
|
||||||||||||||
(dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
—
|
|
|
$
|
182,198
|
|
|
$
|
—
|
|
|
$
|
182,198
|
|
U.S. government-sponsored enterprises
|
—
|
|
|
360,367
|
|
|
—
|
|
|
360,367
|
|
||||
Obligations of states, municipalities and political subdivisions
|
—
|
|
|
4,452,976
|
|
|
—
|
|
|
4,452,976
|
|
||||
Foreign governments
|
—
|
|
|
1,556,110
|
|
|
—
|
|
|
1,556,110
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
1,610,896
|
|
|
—
|
|
|
1,610,896
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
892,155
|
|
|
—
|
|
|
892,155
|
|
||||
Asset-backed securities
|
—
|
|
|
29,775
|
|
|
—
|
|
|
29,775
|
|
||||
Corporate bonds
|
—
|
|
|
1,049,596
|
|
|
—
|
|
|
1,049,596
|
|
||||
Total fixed maturities, available-for-sale
|
—
|
|
|
10,134,073
|
|
|
—
|
|
|
10,134,073
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Insurance, banks and other financial institutions
|
1,981,481
|
|
|
—
|
|
|
119,675
|
|
|
2,101,156
|
|
||||
Industrial, consumer and all other
|
3,968,089
|
|
|
—
|
|
|
—
|
|
|
3,968,089
|
|
||||
Total equity securities
|
5,949,570
|
|
|
—
|
|
|
119,675
|
|
|
6,069,245
|
|
||||
Short-term investments, available-for-sale
|
1,853,387
|
|
|
94,198
|
|
|
—
|
|
|
1,947,585
|
|
||||
Total investments
|
$
|
7,802,957
|
|
|
$
|
10,228,271
|
|
|
$
|
119,675
|
|
|
$
|
18,150,903
|
|
|
December 31, 2017
|
||||||||||||||
(dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
—
|
|
|
$
|
160,613
|
|
|
$
|
—
|
|
|
$
|
160,613
|
|
U.S. government-sponsored enterprises
|
—
|
|
|
363,520
|
|
|
—
|
|
|
363,520
|
|
||||
Obligations of states, municipalities and political subdivisions
|
—
|
|
|
4,566,562
|
|
|
—
|
|
|
4,566,562
|
|
||||
Foreign governments
|
—
|
|
|
1,489,228
|
|
|
—
|
|
|
1,489,228
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
1,234,326
|
|
|
—
|
|
|
1,234,326
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
856,168
|
|
|
—
|
|
|
856,168
|
|
||||
Asset-backed securities
|
—
|
|
|
34,728
|
|
|
—
|
|
|
34,728
|
|
||||
Corporate bonds
|
—
|
|
|
1,235,525
|
|
|
—
|
|
|
1,235,525
|
|
||||
Total fixed maturities
|
—
|
|
|
9,940,670
|
|
|
—
|
|
|
9,940,670
|
|
||||
Equity securities:
(1)
|
|
|
|
|
|
|
|
||||||||
Insurance, banks and other financial institutions
|
1,934,224
|
|
|
—
|
|
|
168,809
|
|
|
2,103,033
|
|
||||
Industrial, consumer and all other
|
3,864,814
|
|
|
—
|
|
|
—
|
|
|
3,864,814
|
|
||||
Total equity securities
|
5,799,038
|
|
|
—
|
|
|
168,809
|
|
|
5,967,847
|
|
||||
Short-term investments
|
2,065,749
|
|
|
95,225
|
|
|
—
|
|
|
2,160,974
|
|
||||
Total investments available-for-sale
(1)
|
$
|
7,864,787
|
|
|
$
|
10,035,895
|
|
|
$
|
168,809
|
|
|
$
|
18,069,491
|
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See note 2.
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Equity securities, beginning of period
|
$
|
151,398
|
|
|
$
|
178,043
|
|
|
$
|
168,809
|
|
|
$
|
191,203
|
|
Purchases
|
—
|
|
|
1,250
|
|
|
28,900
|
|
|
7,250
|
|
||||
Sales
|
(6,401
|
)
|
|
(1,303
|
)
|
|
(34,653
|
)
|
|
(26,674
|
)
|
||||
Total gains (losses) included in net income
|
(25,322
|
)
|
|
5,923
|
|
|
(43,381
|
)
|
|
12,134
|
|
||||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Equity securities, end of period
|
$
|
119,675
|
|
|
$
|
183,913
|
|
|
$
|
119,675
|
|
|
$
|
183,913
|
|
Change in fair value of equity securities included in net income relating to assets held at June 30, 2018 and 2017
|
$
|
(25,322
|
)
|
|
$
|
5,923
|
|
|
$
|
(43,381
|
)
|
|
$
|
12,134
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Markel Ventures:
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
472,323
|
|
|
$
|
217,175
|
|
|
$
|
766,459
|
|
|
$
|
414,239
|
|
Services
|
106,433
|
|
|
96,422
|
|
|
204,354
|
|
|
186,293
|
|
||||
Total Markel Ventures
|
$
|
578,756
|
|
|
$
|
313,597
|
|
|
$
|
970,813
|
|
|
$
|
600,532
|
|
|
Quarter Ended June 30, 2018
|
||||||||||||||||||||||
(dollars in thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel Ventures
|
|
Other
(1)
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
1,233,828
|
|
|
$
|
208,805
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
554,800
|
|
|
$
|
1,997,433
|
|
Net written premiums
|
1,001,126
|
|
|
178,729
|
|
|
—
|
|
|
—
|
|
|
751
|
|
|
1,180,606
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
918,194
|
|
|
229,613
|
|
|
—
|
|
|
—
|
|
|
377
|
|
|
1,148,184
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(610,634
|
)
|
|
(145,992
|
)
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
(756,674
|
)
|
||||||
Prior accident years
|
139,485
|
|
|
18,525
|
|
|
—
|
|
|
—
|
|
|
(514
|
)
|
|
157,496
|
|
||||||
Amortization of policy acquisition costs
|
(191,843
|
)
|
|
(57,407
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(249,250
|
)
|
||||||
Other operating expenses
|
(180,928
|
)
|
|
(21,178
|
)
|
|
—
|
|
|
—
|
|
|
(214
|
)
|
|
(202,320
|
)
|
||||||
Underwriting profit (loss)
|
74,274
|
|
|
23,561
|
|
|
—
|
|
|
—
|
|
|
(399
|
)
|
|
97,436
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
105,195
|
|
|
192
|
|
|
—
|
|
|
105,387
|
|
||||||
Net investment gains
|
—
|
|
|
—
|
|
|
105,249
|
|
|
—
|
|
|
—
|
|
|
105,249
|
|
||||||
Other revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
578,756
|
|
|
49,437
|
|
|
628,193
|
|
||||||
Other expenses
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(555,833
|
)
|
|
(39,510
|
)
|
|
(595,343
|
)
|
||||||
Amortization of intangible assets
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,096
|
)
|
|
(19,545
|
)
|
|
(29,641
|
)
|
||||||
Segment profit (loss)
|
$
|
74,274
|
|
|
$
|
23,561
|
|
|
$
|
210,444
|
|
|
$
|
13,019
|
|
|
$
|
(10,017
|
)
|
|
$
|
311,281
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(36,702
|
)
|
|||||||||||
Net foreign exchange gains
|
|
|
|
|
|
|
|
|
|
|
86,158
|
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
360,737
|
|
||||||||||
U.S. GAAP combined ratio
(4)
|
92
|
%
|
|
90
|
%
|
|
|
|
|
|
NM
|
|
(5)
|
92
|
%
|
(1)
|
Other segment profit (loss) represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that is not allocated to a reportable segment.
|
(2)
|
Other expenses for the Markel Ventures segment include depreciation expense of
$12.8 million
for the quarter ended
June 30, 2018
.
|
(3)
|
Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to any other reportable segments.
|
(4)
|
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.
|
(5)
|
NM - Ratio is not meaningful
|
|
Quarter Ended June 30, 2017
|
||||||||||||||||||||||
(dollars in thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel Ventures
|
|
Other
(1)
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
1,109,278
|
|
|
$
|
247,902
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
1,357,164
|
|
Net written premiums
|
917,286
|
|
|
220,466
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
1,137,657
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
804,189
|
|
|
229,480
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
1,033,574
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(538,399
|
)
|
|
(146,186
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(684,585
|
)
|
||||||
Prior accident years
|
132,528
|
|
|
28,151
|
|
|
—
|
|
|
—
|
|
|
928
|
|
|
161,607
|
|
||||||
Amortization of policy acquisition costs
|
(160,388
|
)
|
|
(53,086
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(213,474
|
)
|
||||||
Other operating expenses
|
(163,480
|
)
|
|
(24,181
|
)
|
|
—
|
|
|
—
|
|
|
(135
|
)
|
|
(187,796
|
)
|
||||||
Underwriting profit
|
74,450
|
|
|
34,178
|
|
|
—
|
|
|
—
|
|
|
698
|
|
|
109,326
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
99,239
|
|
|
60
|
|
|
—
|
|
|
99,299
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
17,627
|
|
|
—
|
|
|
—
|
|
|
17,627
|
|
||||||
Other revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
313,597
|
|
|
17,396
|
|
|
330,993
|
|
||||||
Other expenses
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(271,045
|
)
|
|
(27,711
|
)
|
|
(298,756
|
)
|
||||||
Amortization of intangible assets
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,956
|
)
|
|
(11,070
|
)
|
|
(18,026
|
)
|
||||||
Segment profit (loss)
|
$
|
74,450
|
|
|
$
|
34,178
|
|
|
$
|
116,866
|
|
|
$
|
35,656
|
|
|
$
|
(20,687
|
)
|
|
$
|
240,463
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(31,797
|
)
|
|||||||||||
Net foreign exchange gains
|
|
|
|
|
|
|
|
|
|
|
879
|
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
209,545
|
|
||||||||||
U.S. GAAP combined ratio
(4)
|
91
|
%
|
|
85
|
%
|
|
|
|
|
|
NM
|
|
(5)
|
89
|
%
|
(1)
|
Other segment profit (loss) represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that is not allocated to a reportable segment.
|
(2)
|
Other expenses for the Markel Ventures segment include depreciation expense of
$9.6 million
for the quarter ended
June 30, 2017
.
|
(3)
|
Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to any other reportable segments.
|
(4)
|
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.
|
(5)
|
NM - Ratio is not meaningful
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||
(dollars in thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel Ventures
|
|
Other
(1)
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
2,327,190
|
|
|
$
|
701,138
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,015,989
|
|
|
$
|
4,044,317
|
|
Net written premiums
|
1,914,105
|
|
|
599,787
|
|
|
—
|
|
|
—
|
|
|
1,516
|
|
|
2,515,408
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
1,821,045
|
|
|
477,577
|
|
|
—
|
|
|
—
|
|
|
583
|
|
|
2,299,205
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(1,180,661
|
)
|
|
(299,173
|
)
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
(1,479,882
|
)
|
||||||
Prior accident years
|
258,658
|
|
|
5,454
|
|
|
—
|
|
|
—
|
|
|
1,474
|
|
|
265,586
|
|
||||||
Amortization of policy acquisition costs
|
(371,328
|
)
|
|
(119,827
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(491,155
|
)
|
||||||
Other operating expenses
|
(350,899
|
)
|
|
(33,308
|
)
|
|
—
|
|
|
—
|
|
|
(598
|
)
|
|
(384,805
|
)
|
||||||
Underwriting profit
|
176,815
|
|
|
30,723
|
|
|
—
|
|
|
—
|
|
|
1,411
|
|
|
208,949
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
213,089
|
|
|
314
|
|
|
—
|
|
|
213,403
|
|
||||||
Net investment losses
|
—
|
|
|
—
|
|
|
(17,749
|
)
|
|
—
|
|
|
—
|
|
|
(17,749
|
)
|
||||||
Other revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
970,813
|
|
|
96,812
|
|
|
1,067,625
|
|
||||||
Other expenses
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(914,138
|
)
|
|
(83,335
|
)
|
|
(997,473
|
)
|
||||||
Amortization of intangible assets
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,193
|
)
|
|
(38,271
|
)
|
|
(58,464
|
)
|
||||||
Segment profit (loss)
|
$
|
176,815
|
|
|
$
|
30,723
|
|
|
$
|
195,340
|
|
|
$
|
36,796
|
|
|
$
|
(23,383
|
)
|
|
$
|
416,291
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(76,761
|
)
|
|||||||||||
Net foreign exchange gains
|
|
|
|
|
|
|
|
|
|
|
64,044
|
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
403,574
|
|
||||||||||
U.S. GAAP combined ratio
(4)
|
90
|
%
|
|
94
|
%
|
|
|
|
|
|
NM
|
|
(5)
|
91
|
%
|
(1)
|
Other segment profit (loss) represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that is not allocated to a reportable segment.
|
(2)
|
Other expenses for the Markel Ventures segment include depreciation expense of
$25.5 million
for the
six
months ended
June 30, 2018
.
|
(3)
|
Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to any other reportable segments.
|
(4)
|
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.
|
(5)
|
NM - Ratio is not meaningful
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||||
(dollars in thousands)
|
Insurance
|
|
Reinsurance
|
|
Investing
|
|
Markel Ventures
|
|
Other
(1)
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
2,022,275
|
|
|
$
|
795,639
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2,817,915
|
|
Net written premiums
|
1,687,803
|
|
|
710,062
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
2,397,886
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
1,561,038
|
|
|
455,117
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
2,016,176
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(1,031,135
|
)
|
|
(291,796
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,322,931
|
)
|
||||||
Prior accident years
|
225,414
|
|
|
(43,412
|
)
|
|
—
|
|
|
—
|
|
|
6,232
|
|
|
188,234
|
|
||||||
Amortization of policy acquisition costs
|
(308,077
|
)
|
|
(109,945
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(418,022
|
)
|
||||||
Other operating expenses
|
(309,877
|
)
|
|
(46,350
|
)
|
|
—
|
|
|
—
|
|
|
(299
|
)
|
|
(356,526
|
)
|
||||||
Underwriting profit (loss)
|
137,363
|
|
|
(36,386
|
)
|
|
—
|
|
|
—
|
|
|
5,954
|
|
|
106,931
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
199,564
|
|
|
103
|
|
|
—
|
|
|
199,667
|
|
||||||
Net investment gains
|
—
|
|
|
—
|
|
|
38,492
|
|
|
—
|
|
|
—
|
|
|
38,492
|
|
||||||
Other revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
600,532
|
|
|
38,377
|
|
|
638,909
|
|
||||||
Other expenses
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(522,357
|
)
|
|
(59,032
|
)
|
|
(581,389
|
)
|
||||||
Amortization of intangible assets
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,860
|
)
|
|
(20,936
|
)
|
|
(34,796
|
)
|
||||||
Segment profit (loss)
|
$
|
137,363
|
|
|
$
|
(36,386
|
)
|
|
$
|
238,056
|
|
|
$
|
64,418
|
|
|
$
|
(35,637
|
)
|
|
$
|
367,814
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(65,199
|
)
|
|||||||||||
Net foreign exchange gains
|
|
|
|
|
|
|
|
|
|
|
974
|
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
303,589
|
|
||||||||||
U.S. GAAP combined ratio
(4)
|
91
|
%
|
|
108
|
%
|
|
|
|
|
|
NM
|
|
(5)
|
95
|
%
|
(1)
|
Other segment profit (loss) represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that is not allocated to a reportable segment.
|
(2)
|
Other expenses for the Markel Ventures segment include depreciation expense of
$19.0 million
for the
six
months ended
June 30, 2017
.
|
(3)
|
Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to any other reportable segments.
|
(4)
|
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.
|
(5)
|
NM - Ratio is not meaningful
|
b)
|
The following table reconciles segment assets to the Company's consolidated balance sheets.
|
(dollars in thousands)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Segment assets:
|
|
|
|
||||
Investing
|
$
|
20,303,090
|
|
|
$
|
20,317,160
|
|
Underwriting
|
6,955,342
|
|
|
6,828,048
|
|
||
Markel Ventures
|
1,936,966
|
|
|
1,900,728
|
|
||
Total segment assets
|
29,195,398
|
|
|
29,045,936
|
|
||
Other operations
|
4,051,633
|
|
|
3,759,080
|
|
||
Total assets
|
$
|
33,247,031
|
|
|
$
|
32,805,016
|
|
|
Six Months Ended June 30,
|
||||||
(dollars in thousands)
|
2018
|
|
2017
|
||||
Net reserves for losses and loss adjustment expenses, beginning of year
|
$
|
8,964,945
|
|
|
$
|
8,108,717
|
|
Foreign currency movements
|
(20,554
|
)
|
|
57,991
|
|
||
Adjusted net reserves for losses and loss adjustment expenses, beginning of year
|
8,944,391
|
|
|
8,166,708
|
|
||
Incurred losses and loss adjustment expenses:
|
|
|
|
||||
Current accident year
|
1,479,882
|
|
|
1,322,931
|
|
||
Prior accident years
|
(265,613
|
)
|
|
(184,367
|
)
|
||
Total incurred losses and loss adjustment expenses
|
1,214,269
|
|
|
1,138,564
|
|
||
Payments:
|
|
|
|
||||
Current accident year
|
195,873
|
|
|
186,138
|
|
||
Prior accident years
|
1,073,004
|
|
|
829,126
|
|
||
Total payments
|
1,268,877
|
|
|
1,015,264
|
|
||
Effect of foreign currency rate changes
|
(101
|
)
|
|
2,333
|
|
||
Net reserves for losses and loss adjustment expenses of acquired insurance companies
|
—
|
|
|
12,702
|
|
||
Net reserves for losses and loss adjustment expenses, end of period
|
8,889,682
|
|
|
8,305,043
|
|
||
Reinsurance recoverable on unpaid losses
|
4,739,259
|
|
|
2,007,652
|
|
||
Gross reserves for losses and loss adjustment expenses, end of period
|
$
|
13,628,941
|
|
|
$
|
10,312,695
|
|
|
Quarter Ended June 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
(dollars in thousands)
|
Markel Ventures
|
|
Other
|
|
Total
|
|
Markel Ventures
|
|
Other
|
|
Total
|
||||||||||||
Products
|
$
|
461,007
|
|
|
$
|
—
|
|
|
$
|
461,007
|
|
|
$
|
204,839
|
|
|
$
|
—
|
|
|
$
|
204,839
|
|
Services
|
94,035
|
|
|
8,972
|
|
|
103,007
|
|
|
85,617
|
|
|
7,348
|
|
|
92,965
|
|
||||||
Investment management
|
—
|
|
|
17,418
|
|
|
17,418
|
|
|
—
|
|
|
9,277
|
|
|
9,277
|
|
||||||
Total revenues from contracts with customers
|
555,042
|
|
|
26,390
|
|
|
581,432
|
|
|
290,456
|
|
|
16,625
|
|
|
307,081
|
|
||||||
Program services
|
—
|
|
|
22,635
|
|
|
22,635
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
23,714
|
|
|
412
|
|
|
24,126
|
|
|
23,141
|
|
|
771
|
|
|
23,912
|
|
||||||
Total Other Revenues
|
$
|
578,756
|
|
|
$
|
49,437
|
|
|
$
|
628,193
|
|
|
$
|
313,597
|
|
|
$
|
17,396
|
|
|
$
|
330,993
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
(dollars in thousands)
|
Markel Ventures
|
|
Other
|
|
Total
|
|
Markel Ventures
|
|
Other
|
|
Total
|
||||||||||||
Products
|
$
|
744,480
|
|
|
$
|
—
|
|
|
$
|
744,480
|
|
|
$
|
389,572
|
|
|
$
|
—
|
|
|
$
|
389,572
|
|
Services
|
181,477
|
|
|
17,896
|
|
|
199,373
|
|
|
165,229
|
|
|
18,534
|
|
|
183,763
|
|
||||||
Investment management
|
—
|
|
|
34,707
|
|
|
34,707
|
|
|
—
|
|
|
18,636
|
|
|
18,636
|
|
||||||
Total revenues from contracts with customers
|
925,957
|
|
|
52,603
|
|
|
978,560
|
|
|
554,801
|
|
|
37,170
|
|
|
591,971
|
|
||||||
Program services
|
—
|
|
|
43,332
|
|
|
43,332
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
44,856
|
|
|
877
|
|
|
45,733
|
|
|
45,731
|
|
|
1,207
|
|
|
46,938
|
|
||||||
Total Other Revenues
|
$
|
970,813
|
|
|
$
|
96,812
|
|
|
$
|
1,067,625
|
|
|
$
|
600,532
|
|
|
$
|
38,377
|
|
|
$
|
638,909
|
|
(dollars in thousands)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Receivables
|
$
|
277,624
|
|
|
$
|
176,865
|
|
Customer deposits
|
78,083
|
|
|
61,546
|
|
|
Quarter Ended June 30,
|
||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||||||||||
(dollars in thousands)
|
Direct
|
|
Assumed
|
|
Ceded
|
|
Net Premiums
|
|
Direct
|
|
Assumed
|
|
Ceded
|
|
Net Premiums
|
||||||||||||||||
Underwriting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Written
|
$
|
1,182,683
|
|
|
$
|
259,960
|
|
|
$
|
(262,781
|
)
|
|
$
|
1,179,862
|
|
|
$
|
1,046,833
|
|
|
$
|
310,331
|
|
|
$
|
(219,507
|
)
|
|
$
|
1,137,657
|
|
Earned
|
1,070,248
|
|
|
316,718
|
|
|
(239,152
|
)
|
|
1,147,814
|
|
|
914,249
|
|
|
312,538
|
|
|
(193,213
|
)
|
|
1,033,574
|
|
||||||||
Program Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Written
|
549,630
|
|
|
5,160
|
|
|
(554,046
|
)
|
|
744
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Earned
|
470,824
|
|
|
2,286
|
|
|
(472,740
|
)
|
|
370
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Written
|
1,732,313
|
|
|
265,120
|
|
|
(816,827
|
)
|
|
1,180,606
|
|
|
1,046,833
|
|
|
310,331
|
|
|
(219,507
|
)
|
|
1,137,657
|
|
||||||||
Earned
|
$
|
1,541,072
|
|
|
$
|
319,004
|
|
|
$
|
(711,892
|
)
|
|
$
|
1,148,184
|
|
|
$
|
914,249
|
|
|
$
|
312,538
|
|
|
$
|
(193,213
|
)
|
|
$
|
1,033,574
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||||||||||
(dollars in thousands)
|
Direct
|
|
Assumed
|
|
Ceded
|
|
Net Premiums
|
|
Direct
|
|
Assumed
|
|
Ceded
|
|
Net Premiums
|
||||||||||||||||
Underwriting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Written
|
$
|
2,222,061
|
|
|
$
|
806,273
|
|
|
$
|
(514,338
|
)
|
|
$
|
2,513,996
|
|
|
$
|
1,896,317
|
|
|
$
|
921,598
|
|
|
$
|
(420,029
|
)
|
|
$
|
2,397,886
|
|
Earned
|
2,108,183
|
|
|
652,208
|
|
|
(461,665
|
)
|
|
2,298,726
|
|
|
1,777,235
|
|
|
620,107
|
|
|
(381,166
|
)
|
|
2,016,176
|
|
||||||||
Program Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Written
|
1,007,454
|
|
|
8,529
|
|
|
(1,014,571
|
)
|
|
1,412
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Earned
|
893,749
|
|
|
3,738
|
|
|
(897,008
|
)
|
|
479
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Written
|
3,229,515
|
|
|
814,802
|
|
|
(1,528,909
|
)
|
|
2,515,408
|
|
|
1,896,317
|
|
|
921,598
|
|
|
(420,029
|
)
|
|
2,397,886
|
|
||||||||
Earned
|
$
|
3,001,932
|
|
|
$
|
655,946
|
|
|
$
|
(1,358,673
|
)
|
|
$
|
2,299,205
|
|
|
$
|
1,777,235
|
|
|
$
|
620,107
|
|
|
$
|
(381,166
|
)
|
|
$
|
2,016,176
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands, except per share amounts)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income to shareholders
|
$
|
278,231
|
|
|
$
|
149,660
|
|
|
$
|
213,925
|
|
|
$
|
219,529
|
|
Adjustment of redeemable noncontrolling interests
|
363
|
|
|
(5,141
|
)
|
|
5,414
|
|
|
(20,284
|
)
|
||||
Adjusted net income to shareholders
|
$
|
278,594
|
|
|
$
|
144,519
|
|
|
$
|
219,339
|
|
|
$
|
199,245
|
|
|
|
|
|
|
|
|
|
||||||||
Basic common shares outstanding
|
13,925
|
|
|
13,977
|
|
|
13,929
|
|
|
13,987
|
|
||||
Dilutive potential common shares from conversion of options
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Dilutive potential common shares from conversion of restricted stock units and restricted stock
|
25
|
|
|
40
|
|
|
24
|
|
|
43
|
|
||||
Diluted shares outstanding
|
13,950
|
|
|
14,019
|
|
|
13,953
|
|
|
14,032
|
|
||||
Basic net income per share
(1)
|
$
|
20.01
|
|
|
$
|
10.34
|
|
|
$
|
15.75
|
|
|
$
|
14.25
|
|
Diluted net income per share
(1)
|
$
|
19.97
|
|
|
$
|
10.31
|
|
|
$
|
15.72
|
|
|
$
|
14.20
|
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2.
|
(dollars in thousands)
|
Unrealized Holding Gains on Available-for-Sale Securities
|
|
Foreign Currency
|
|
Net Actuarial Pension Loss
|
|
Total
|
||||||||
December 31, 2016
|
$
|
1,714,930
|
|
|
$
|
(84,406
|
)
|
|
$
|
(64,658
|
)
|
|
$
|
1,565,866
|
|
Other comprehensive income before reclassifications
|
350,349
|
|
|
3,491
|
|
|
—
|
|
|
353,840
|
|
||||
Amounts reclassified from accumulated other comprehensive income
|
(9,391
|
)
|
|
—
|
|
|
1,618
|
|
|
(7,773
|
)
|
||||
Total other comprehensive income
|
340,958
|
|
|
3,491
|
|
|
1,618
|
|
|
346,067
|
|
||||
June 30, 2017
|
$
|
2,055,888
|
|
|
$
|
(80,915
|
)
|
|
$
|
(63,040
|
)
|
|
$
|
1,911,933
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
$
|
2,477,973
|
|
|
$
|
(74,003
|
)
|
|
$
|
(58,399
|
)
|
|
$
|
2,345,571
|
|
Cumulative effect of adoption of ASU No. 2016-01
|
(2,615,734
|
)
|
|
2,492
|
|
|
—
|
|
|
(2,613,242
|
)
|
||||
Cumulative effect of adoption of ASU No. 2018-02
|
401,539
|
|
|
—
|
|
|
—
|
|
|
401,539
|
|
||||
Other comprehensive income (loss) before reclassifications
|
(215,067
|
)
|
|
(5,516
|
)
|
|
1,232
|
|
|
(219,351
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
(1)
|
(5,077
|
)
|
|
—
|
|
|
—
|
|
|
(5,077
|
)
|
||||
Total other comprehensive income (loss)
|
(2,434,339
|
)
|
|
(3,024
|
)
|
|
1,232
|
|
|
(2,436,131
|
)
|
||||
June 30, 2018
|
$
|
43,634
|
|
|
$
|
(77,027
|
)
|
|
$
|
(57,167
|
)
|
|
$
|
(90,560
|
)
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2.
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Change in net unrealized gains on available-for-sale investments:
(1)
|
|
|
|
|
|
|
|
||||||||
Net holding gains (losses) arising during the period
|
$
|
(32,548
|
)
|
|
$
|
93,935
|
|
|
$
|
(60,778
|
)
|
|
$
|
168,928
|
|
Reclassification adjustments for net gains (losses) included in net income
|
(1,566
|
)
|
|
136
|
|
|
(1,349
|
)
|
|
(2,396
|
)
|
||||
Change in net unrealized gains on available-for-sale investments
|
(34,114
|
)
|
|
94,071
|
|
|
(62,127
|
)
|
|
166,532
|
|
||||
Change in foreign currency translation adjustments
|
(4,288
|
)
|
|
(466
|
)
|
|
(3,522
|
)
|
|
(503
|
)
|
||||
Change in net actuarial pension loss
|
192
|
|
|
154
|
|
|
328
|
|
|
333
|
|
||||
Total
|
$
|
(38,210
|
)
|
|
$
|
93,759
|
|
|
$
|
(65,321
|
)
|
|
$
|
166,362
|
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2.
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Unrealized holding gains on available-for-sale investments:
(1)
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment losses
|
$
|
—
|
|
|
$
|
(604
|
)
|
|
$
|
—
|
|
|
$
|
(3,817
|
)
|
Net realized investment gains, excluding other-than-temporary impairment losses
|
7,457
|
|
|
690
|
|
|
6,426
|
|
|
15,604
|
|
||||
Total before taxes
|
7,457
|
|
|
86
|
|
|
6,426
|
|
|
11,787
|
|
||||
Income taxes
|
(1,566
|
)
|
|
136
|
|
|
(1,349
|
)
|
|
(2,396
|
)
|
||||
Reclassification of unrealized holding gains, net of taxes
|
$
|
5,891
|
|
|
$
|
222
|
|
|
$
|
5,077
|
|
|
$
|
9,391
|
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial pension loss:
|
|
|
|
|
|
|
|
||||||||
Underwriting, acquisition and insurance expenses
|
$
|
(760
|
)
|
|
$
|
(1,056
|
)
|
|
$
|
(1,560
|
)
|
|
$
|
(1,951
|
)
|
Income taxes
|
192
|
|
|
154
|
|
|
328
|
|
|
333
|
|
||||
Reclassification of net actuarial pension loss, net of taxes
|
$
|
(568
|
)
|
|
$
|
(902
|
)
|
|
$
|
(1,232
|
)
|
|
$
|
(1,618
|
)
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2.
|
•
|
Underwriting - our underwriting operations are comprised of our risk-bearing insurance operations, which include the run-off of underwriting operations that were discontinued in conjunction with acquisitions
|
•
|
Investing - our investing activities are primarily related to our underwriting operations
|
•
|
Markel Ventures - our Markel Ventures operations include our controlling interests in a diverse portfolio of businesses that operate in various industries
|
•
|
Program Services - our program services business serves as a fronting platform that provides other insurance companies access to the U.S. property and casualty insurance market
|
•
|
Markel CATCo - our Markel CATCo operations include an investment fund manager that offers insurance-linked securities to investors
|
•
|
ASU No. 2016-02,
Leases (Topic 842)
|
•
|
ASU No. 2016-13,
Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Insurance segment underwriting profit
|
$
|
74,274
|
|
|
$
|
74,450
|
|
|
$
|
176,815
|
|
|
$
|
137,363
|
|
Reinsurance segment underwriting profit (loss)
|
23,561
|
|
|
34,178
|
|
|
30,723
|
|
|
(36,386
|
)
|
||||
Other underwriting profit (loss)
|
(399
|
)
|
|
698
|
|
|
1,411
|
|
|
5,954
|
|
||||
Net investment income
|
105,387
|
|
|
99,299
|
|
|
213,403
|
|
|
199,667
|
|
||||
Net investment gains (losses)
(1)
|
105,249
|
|
|
17,627
|
|
|
(17,749
|
)
|
|
38,492
|
|
||||
Other revenues
|
628,193
|
|
|
330,993
|
|
|
1,067,625
|
|
|
638,909
|
|
||||
Other expenses
|
(595,343
|
)
|
|
(298,756
|
)
|
|
(997,473
|
)
|
|
(581,389
|
)
|
||||
Amortization of intangible assets
|
(29,641
|
)
|
|
(18,026
|
)
|
|
(58,464
|
)
|
|
(34,796
|
)
|
||||
Interest expense
|
(36,702
|
)
|
|
(31,797
|
)
|
|
(76,761
|
)
|
|
(65,199
|
)
|
||||
Foreign exchange gain
|
86,158
|
|
|
879
|
|
|
64,044
|
|
|
974
|
|
||||
Income tax expense
|
(81,150
|
)
|
|
(58,118
|
)
|
|
(189,581
|
)
|
|
(81,122
|
)
|
||||
Net income attributable to noncontrolling interests
|
(1,356
|
)
|
|
(1,767
|
)
|
|
(68
|
)
|
|
(2,938
|
)
|
||||
Net income to shareholders
|
$
|
278,231
|
|
|
$
|
149,660
|
|
|
$
|
213,925
|
|
|
$
|
219,529
|
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2 of the notes to consolidated financial statements.
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross premium volume
(1)
|
$
|
1,442,643
|
|
|
$
|
1,357,164
|
|
|
$
|
3,028,334
|
|
|
$
|
2,817,915
|
|
Net written premiums
|
1,180,606
|
|
|
1,137,657
|
|
|
2,515,408
|
|
|
2,397,886
|
|
||||
Net retention
(1)
|
82
|
%
|
|
84
|
%
|
|
83
|
%
|
|
85
|
%
|
||||
Earned premiums
|
1,148,184
|
|
|
1,033,574
|
|
|
2,299,205
|
|
|
2,016,176
|
|
||||
Losses and loss adjustment expenses
|
599,178
|
|
|
522,978
|
|
|
1,214,296
|
|
|
1,134,697
|
|
||||
Underwriting, acquisition and insurance expenses
|
451,570
|
|
|
401,270
|
|
|
875,960
|
|
|
774,548
|
|
||||
Underwriting profit
|
97,436
|
|
|
109,326
|
|
|
208,949
|
|
|
106,931
|
|
||||
|
|
|
|
|
|
|
|
||||||||
U.S. GAAP Combined Ratios
|
|
|
|
|
|
|
|
||||||||
Insurance
|
92
|
%
|
|
91
|
%
|
|
90
|
%
|
|
91
|
%
|
||||
Reinsurance
|
90
|
%
|
|
85
|
%
|
|
94
|
%
|
|
108
|
%
|
||||
Markel Corporation (Consolidated)
|
92
|
%
|
|
89
|
%
|
|
91
|
%
|
|
95
|
%
|
(1)
|
Gross premium volume and net retention for the quarter and
six
months ended
June 30, 2018
exclude
$554.8 million
and
$1.0 billion
, respectively, of gross written premium attributable to our program services business, substantially all of which was ceded.
|
•
|
The current accident year loss ratio for the quarter ended June 30, 2018 was flat compared to the prior year period. Favorable impacts from our new surety and lender services businesses, which were acquired in 2017 and carry a lower loss ratio than other products in the segment and the impact of large losses on our property product lines in 2017 were offset by higher attritional losses in the second quarter of 2018 compared to 2017 on our marine and energy product lines.
|
•
|
The Insurance segment's combined ratio for the quarter ended June 30, 2018 included $139.5 million of favorable development on prior accident years' loss reserves compared to $132.5 million for the same period in 2017. Despite more favorable development on prior years' loss reserves in 2018, the benefit to our prior years' loss ratio was reduced given the impact of higher earned premiums. The increase in favorable development was primarily due to more favorable development on our workers' compensation and general liability product lines, partially offset by adverse development on our property product lines in 2018 compared to 2017. For the quarter ended June 30, 2018, favorable development was most significant on our workers' compensation product lines, primarily on the 2015 to 2017 accident years, general liability and marine and energy product lines across several accident years and professional liability product lines, primarily on the 2016 accident year. The favorable development on prior years' loss reserves in the second quarter of 2017 was most significant on our general liability, workers' compensation and professional liability product lines.
|
•
|
The expense ratio was flat compared to the prior year, primarily due to an unfavorable impact from our new surety business, which carries a higher expense ratio than other products in the segment, and from our new lender services business, as well as higher profit sharing in the second quarter of 2018 compared to 2017. These increases were offset by the favorable impact from higher earned premiums in the second quarter of 2018 compared to 2017. The expense ratio for the quarter ended June 30, 2017 also included non-recurring acquisition-related expenses.
|
•
|
The current accident year loss ratio for the six months ended June 30, 2018 decreased compared to the prior year period primarily due to the impact of large losses on our property product lines in 2017 and a favorable impact from our new surety and lender services businesses, which were acquired in 2017 and carry a lower loss ratio than other products in the segment.
|
•
|
The Insurance segment's combined ratio for the six months ended June 30, 2018 included $258.7 million of favorable development on prior accident years' loss reserves compared to $225.4 million for the same period in 2017. Despite more favorable development on prior years' loss reserves in 2018, the benefit to our prior years' loss ratio was reduced given the impact of higher earned premiums. The increase in favorable development was primarily due to more favorable development on our workers compensation and marine and energy product lines, partially offset by less favorable development on our property product lines in 2018 compared to 2017. For the six months ended June 30, 2018, favorable development was most significant on our general liability, workers compensation and professional liability product lines across several accident years and on our marine and energy product lines, primarily on the 2015 to 2017 accident years. The favorable development on prior years' loss reserves in 2017 was most significant on our general liability, workers compensation, personal lines, professional liability and marine and energy product lines.
|
•
|
The expense ratio was flat compared to the prior year. The favorable impact from higher earned premiums was offset by an unfavorable impact from our new surety business, which carries a higher expense ratio than other products in the segment, and from our new lender services business.
|
•
|
The Reinsurance segment's combined ratio for the quarter ended June 30, 2018 included $18.5 million of favorable development on prior accident years' loss reserves compared to $28.2 million of favorable development in 2017. The decrease in favorable development was primarily due to less favorable development on our whole account product line in the second quarter of 2018 compared to 2017. In 2018, prior years' loss reserves also included $4.7 million of adverse development, or two points on the Reinsurance segment combined ratio, related to the 2017 catastrophes. These decreases in favorable development were partially offset by more favorable development on our surety and marine and energy product lines. Favorable development in 2018 was most significant on our marine and energy product lines, primarily on the 2013 and 2014 accident years. Favorable development on prior years' loss reserves in 2017 was most significant on our whole account product line.
|
•
|
The expense ratio increased slightly for the quarter ended June 30, 2018 compared to the same period of 2017. Higher commissions as a result of higher earned premiums on our quota share business, which carries higher commission rates than other business in the Reinsurance segment, in 2018 compared to 2017 were largely offset by lower profit sharing expenses in 2018 compared to 2017.
|
•
|
The decrease in the current accident year loss ratio for the six months ended June 30, 2018, was primarily due to higher earned premiums as a result of net favorable premium adjustments in 2018 compared to net unfavorable premium adjustments in 2017. In 2018, favorable premium adjustments were partially offset by additional ceded reinstatement premiums related to the 2017 catastrophes.
|
•
|
The Reinsurance segment's combined ratio for the six months ended June 30, 2018 included $5.5 million of favorable development on prior accident years' loss reserves compared to $43.4 million of adverse development in 2017. In 2018, prior years' loss reserves included $17.0 million of adverse development, or four points on the Reinsurance segment combined ratio, related to the 2017 catastrophes. In 2017, prior years' loss reserves included $85.0 million of adverse development, or 19 points on the Reinsurance segment combined ratio, related to the decrease in the Ogden Rate. We also experienced less favorable development on our whole account product lines in 2018 compared to 2017, adverse development on our property product lines in 2018 compared to favorable development on these lines in 2017 and more adverse development on our general liability product lines in 2018. Favorable development in 2018 was most significant on our surety product lines, primarily on the 2013 and 2015 accident years, and on our marine and energy product lines across several accident years. Favorable development on prior years' loss reserves in 2017 was most significant on our whole account product line and on our property product lines.
|
•
|
The expense ratio decreased for the six months ended June 30, 2018 compared to the same period of 2017. Lower profit sharing expenses in 2018 were partially offset by higher commissions as a result of higher earned premiums on our quota share business in 2018 compared to 2017.
|
Gross Premium Volume
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Insurance
|
$
|
1,233,828
|
|
|
$
|
1,109,278
|
|
|
$
|
2,327,190
|
|
|
$
|
2,022,275
|
|
Reinsurance
|
208,805
|
|
|
247,902
|
|
|
701,138
|
|
|
795,639
|
|
||||
Other
|
10
|
|
|
(16
|
)
|
|
6
|
|
|
1
|
|
||||
Total Underwriting
|
1,442,643
|
|
|
1,357,164
|
|
|
3,028,334
|
|
|
2,817,915
|
|
||||
Other - Program Services
|
554,790
|
|
|
—
|
|
|
1,015,983
|
|
|
—
|
|
||||
Total
|
$
|
1,997,433
|
|
|
$
|
1,357,164
|
|
|
$
|
4,044,317
|
|
|
$
|
2,817,915
|
|
Net Written Premiums
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Insurance
|
$
|
1,001,126
|
|
|
$
|
917,286
|
|
|
$
|
1,914,105
|
|
|
$
|
1,687,803
|
|
Reinsurance
|
178,729
|
|
|
220,466
|
|
|
599,787
|
|
|
710,062
|
|
||||
Other
|
7
|
|
|
(95
|
)
|
|
104
|
|
|
21
|
|
||||
Total Underwriting
|
1,179,862
|
|
|
1,137,657
|
|
|
2,513,996
|
|
|
2,397,886
|
|
||||
Other - Program Services
|
744
|
|
|
—
|
|
|
1,412
|
|
|
—
|
|
||||
Total
|
$
|
1,180,606
|
|
|
$
|
1,137,657
|
|
|
$
|
2,515,408
|
|
|
$
|
2,397,886
|
|
Earned Premiums
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Insurance
|
$
|
918,194
|
|
|
$
|
804,189
|
|
|
$
|
1,821,045
|
|
|
$
|
1,561,038
|
|
Reinsurance
|
229,613
|
|
|
229,480
|
|
|
477,577
|
|
|
455,117
|
|
||||
Other
|
7
|
|
|
(95
|
)
|
|
104
|
|
|
21
|
|
||||
Total Underwriting
|
1,147,814
|
|
|
1,033,574
|
|
|
2,298,726
|
|
|
2,016,176
|
|
||||
Other - Program Services
|
370
|
|
|
—
|
|
|
479
|
|
|
—
|
|
||||
Total
|
$
|
1,148,184
|
|
|
$
|
1,033,574
|
|
|
$
|
2,299,205
|
|
|
$
|
2,016,176
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net investment income
|
$
|
105,387
|
|
|
$
|
99,299
|
|
|
$
|
213,403
|
|
|
$
|
199,667
|
|
Net investment gains (losses)
(1)
|
$
|
105,249
|
|
|
$
|
17,627
|
|
|
$
|
(17,749
|
)
|
|
$
|
38,492
|
|
Change in net unrealized investment gains on available-for-sale securities
|
$
|
(138,094
|
)
|
|
$
|
283,918
|
|
|
$
|
(282,271
|
)
|
|
$
|
507,490
|
|
Investment yield
(2)
|
0.7
|
%
|
|
0.6
|
%
|
|
1.3
|
%
|
|
1.3
|
%
|
||||
Taxable equivalent total investment return, before foreign currency effect
|
|
|
|
|
0.0
|
%
|
|
4.3
|
%
|
||||||
Taxable equivalent total investment return
|
|
|
|
|
(0.1
|
)%
|
|
4.8
|
%
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2 of the notes to consolidated financial statements.
|
(2)
|
Investment yield reflects net investment income as a percentage of monthly average invested assets at cost.
|
(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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Operating revenues
|
$
|
578,948
|
|
|
$
|
313,657
|
|
|
$
|
971,127
|
|
|
$
|
600,635
|
|
Operating income
|
$
|
13,019
|
|
|
$
|
35,656
|
|
|
$
|
36,796
|
|
|
$
|
64,418
|
|
EBITDA
|
$
|
35,865
|
|
|
$
|
52,248
|
|
|
$
|
82,462
|
|
|
$
|
97,292
|
|
Net income to shareholders
|
$
|
565
|
|
|
$
|
20,548
|
|
|
$
|
14,176
|
|
|
$
|
34,547
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Markel Ventures operating income
|
$
|
13,019
|
|
|
$
|
35,656
|
|
|
$
|
36,796
|
|
|
$
|
64,418
|
|
Depreciation expense
|
12,750
|
|
|
9,636
|
|
|
25,473
|
|
|
19,014
|
|
||||
Amortization of intangible assets
|
10,096
|
|
|
6,956
|
|
|
20,193
|
|
|
13,860
|
|
||||
Markel Ventures EBITDA - Total
|
$
|
35,865
|
|
|
$
|
52,248
|
|
|
$
|
82,462
|
|
|
$
|
97,292
|
|
|
|
|
|
|
|
|
|
||||||||
Markel Ventures EBITDA - Products
|
$
|
14,881
|
|
|
$
|
34,474
|
|
|
$
|
47,337
|
|
|
$
|
61,972
|
|
Markel Ventures EBITDA - Services
|
20,984
|
|
|
17,774
|
|
|
35,125
|
|
|
35,320
|
|
||||
Markel Ventures EBITDA - Total
|
$
|
35,865
|
|
|
$
|
52,248
|
|
|
$
|
82,462
|
|
|
$
|
97,292
|
|
|
Six Months Ended June 30,
|
||||
|
2018
|
|
2017
|
||
Effective tax rate
|
47
|
%
|
|
27
|
%
|
Impact of election to tax U.K. subsidiaries as U.S. taxpayers on effective tax rate
|
(25
|
)
|
|
—
|
|
Impact of other discrete items on effective tax rate
|
(2
|
)
|
|
—
|
|
Estimated annual effective tax rate
|
20
|
%
|
|
27
|
%
|
•
|
our expectations about future results of our underwriting, investing and other operations are based on current knowledge and assume 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 on our underwriting, investing and other operations, including demand and pricing in the insurance, reinsurance and other markets in which we operate;
|
•
|
actions by competitors, including the application of new or "disruptive" technologies or business models and 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, fires and weather-related catastrophes) may exceed expectations, are unpredictable and, in the case of fires and 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 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;
|
•
|
the ability or willingness of reinsurers to pay balances due may be adversely affected by industry and economic conditions, deterioration in reinsurer credit quality and coverage disputes, and collateral we hold may not be sufficient to cover a reinsurer's obligation to us;
|
•
|
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;
|
•
|
general economic and market conditions and industry specific conditions, including extended economic recessions or expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations in foreign currency exchange rates, commodity and energy prices and interest rates; volatility in the credit and capital markets; and other factors;
|
•
|
economic conditions, actual or potential defaults in municipal bonds or 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 maturity and equity securities, as well as the carrying value of our other assets and liabilities, and this impact may be heightened by market volatility;
|
•
|
economic conditions may adversely affect our access to capital and credit markets;
|
•
|
the effects of government intervention, including material changes in the monetary policies of central banks, to address financial downturns and economic and currency concerns;
|
•
|
the impacts that political and civil unrest and regional conflicts may have on our businesses and the markets they serve or that any disruptions in regional or worldwide economic conditions generally arising from these situations may have on our businesses, industries or investments;
|
•
|
the impacts that health epidemics and pandemics may have on our business operations and claims activity;
|
•
|
the impact on our businesses of the repeal, in part or in whole, or modification of U.S. health care reform legislation and regulations;
|
•
|
changes in U.S. tax laws or in the tax laws of other jurisdictions in which we operate and adjustments we may make in our operations in response to those changes;
|
•
|
a failure of our enterprise systems, or those of third parties upon which we may rely, or a failure to comply with data protection or privacy regulations;
|
•
|
our acquisitions 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 substantial international operations and investments expose us to increased political, operational and economic risks, including foreign currency exchange rate and credit risk;
|
•
|
the vote by the United Kingdom to leave the European Union, which could have adverse consequences for our businesses, particularly our London-based international insurance operations;
|
•
|
our ability to raise third party capital for existing or new investment vehicles and risks related to our management of third party capital;
|
•
|
the effectiveness of our procedures for compliance with existing and ever increasing guidelines, policies and legal and regulatory standards, rules, laws and regulations;
|
•
|
the impact of economic and trade sanctions and embargo programs on our businesses, including instances in which the requirements and limitations applicable to the global operations of U.S. companies and their affiliates are more restrictive than those applicable to non-U.S. companies and their affiliates;
|
•
|
regulatory changes, or challenges by regulators, regarding the use of certain issuing carrier or fronting arrangements;
|
•
|
our dependence on a limited number of brokers for a large portion of our revenues;
|
•
|
adverse changes in our assigned financial strength or debt ratings could adversely impact us, including our ability to attract and retain business, the amount of capital our insurance subsidiaries must hold and the availability and cost of capital;
|
•
|
the political, legal, regulatory, financial, tax and general economic impacts, and others we cannot anticipate, of Brexit; and
|
•
|
a number of additional factors may adversely affect our Markel Ventures operations, and the markets they serve, and negatively impact their revenues and profitability, including, among others: adverse weather conditions, plant disease and other contaminants; changes in government support for education, healthcare and infrastructure projects; changes in capital spending levels; changes in the housing market; liability for environmental matters; volatility in the market prices for their products; and volatility in commodity prices and interest and foreign currency exchange rates.
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
||||||
Period
|
Total
Number of
Shares
Purchased
|
|
Average
Price
Paid per
Share
|
|
Total
Number of
Shares
Purchased as
Part
of Publicly
Announced
Plans
or Programs
(1)
|
|
Approximate
Dollar
Value of
Shares that
May Yet Be
Purchased
Under
the Plans or
Programs
(in thousands)
|
||||||
April 1, 2018 through April 30, 2018
|
3,629
|
|
|
$
|
1,156.05
|
|
|
3,629
|
|
|
$
|
126,429
|
|
May 1, 2018 through May 31, 2018
|
2,970
|
|
|
$
|
1,263.90
|
|
|
2,970
|
|
|
$
|
298,311
|
|
June 1, 2018 through June 30, 2018
|
3,465
|
|
|
$
|
1,104.97
|
|
|
3,465
|
|
|
$
|
294,483
|
|
Total
|
10,064
|
|
|
$
|
1,170.29
|
|
|
10,064
|
|
|
$
|
294,483
|
|
(1)
|
The Board of Directors approved the repurchase of up to $300 million of our common stock pursuant to a share repurchase program publicly announced on May 14, 2018 (the 2018 Program). The 2018 Program terminated and replaced a similar program authorized in November 2013 (the 2013 Program). Under the 2018 Program, as under the 2013 Program, we may repurchase outstanding shares of our common stock from time to time in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934. The 2018 Program has no expiration date but may be terminated by the Board of Directors at any time. As of May 14, 2018, no further share repurchases may be made under the 2013 Program; future share repurchases will be made pursuant to the 2018 Program.
|
Exhibit No.
|
Document Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**
|
Filed with this report.
|
|
Markel Corporation
|
|
|
|
|
|
By:
|
/s/ Thomas S. Gayner
|
|
|
Thomas S. Gayner
|
|
|
Co-Chief Executive Officer
|
|
|
(Co-Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Richard R. Whitt, III
|
|
|
Richard R. Whitt, III
|
|
|
Co-Chief Executive Officer
|
|
|
(Co-Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Anne G. Waleski
|
|
|
Anne G. Waleski
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
MARKEL CORPORATION
|
|
|
|
|
|
By:
/s/ Debora J. Wilson
_______
|
|
|
Compensation Committee Chair
|
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.
|
July 31, 2018
|
|
/s/ Thomas S. Gayner
|
|
|
Thomas S. Gayner
|
|
|
Co-Chief Executive Officer
|
|
|
(Co-Principal 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.
|
July 31, 2018
|
|
/s/ Richard R. Whitt, III
|
|
|
Richard R. Whitt, III
|
|
|
Co-Chief Executive Officer
|
|
|
(Co-Principal 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.
|
July 31, 2018
|
|
/s/ Anne G. Waleski
|
|
|
Anne G. Waleski
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal 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/ Thomas S. Gayner
|
|
Thomas S. Gayner
|
|
Co-Chief Executive Officer
|
|
(Co-Principal Executive Officer)
|
|
July 31, 2018
|
|
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/ Richard R. Whitt, III
|
|
Richard R. Whitt, III
|
|
Co-Chief Executive Officer
|
|
(Co-Principal Executive Officer)
|
|
July 31, 2018
|
|
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
|
|
(Principal Financial Officer)
|
|
July 31, 2018
|
|