MKL - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to Markel Corporation Second Quarter 2020 Conference Call. [Operator Instructions] During the call, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They are based on current assumptions and opinions concerning a variety of known and unknown risks. Actual results may differ materially from those contained in or suggested by such forward-looking statements.

Additional information about factors that could cause actual results to differ materially from those projected in the forward-looking statement is included under the captions Risk Factors and Safe Harbor and Cautionary Statement in our most recent annual report on Form 10-K and quarterly report on Form 10-Q. certain measures discuss today. the also may non-GAAP in financial call We

Officer. recent can conference can comparable at note, these event to GAAP most directly the www.markel.com like measures would now is to XX-Q, measures our You Tom Please Relations most Gayner, this to in GAAP our find go section. our found Co-Chief be on ahead. and over Investor reconciliation Executive in being the Form website I which Please turn for recorded.

Thomas Gayner

world, much Good so Markel our usual, today as Richie to Thanks and this is doesn't welcome Corporation Noble. seem Co-CEO, would these second of morning, well It that in maybe joined much. CFO, and time Jeremy we the Tom That to quarter as call. I'm This be into my last days. usual as the usual by conference call. the Whitt; the fall camp get use to Gayner,

several is commented for In the use that unprecedented. an months the fact word of unprecedented I've last there

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and three meaningful ventures, profitability engines investments insurance, of results, each and the Our quarter growth second reflect their efforts. of in

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people our this the Jeremy our Markel extend Speaking in of customers serve in I dedicated have unprecedented the which want to by Coronavirus. conditions to for in and adapted to the Richie persisted way associates thanks our and triggered

effects a namely of and COVID-XX focus to today's racism. another as take of Now a moment virus on address I call also society, of financial to the will facing while want the measurements much we're virus

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listening are We and learning.

forward our an and investments numbers on insurance-linked operations. with you update the operations. that, you I ventures securities the then on and After will and comments the will our faced reach all components style, a effect. to beliefs core progress. going behind Count haven’t do these before can a to potential. all in another way better are difficult the mean to atmosphere an confronting Those We second the cite ideas. include to crucial personal this a and and conversations am namely the question, head-on Jeremy, words find the their on honesty I to follow Markel think learn on questions. problems insurance update we will real a and make our statement word We gives with reports it because our Richie answering then provide and people in style. way. having a commitment such We're which think the I in to us in new I financial dealings turn we is At chance providing very refreshing The are quarter. in look those openness consistent issues that positive point, your this. they Jeremy. fairness to way and to

Jeremy Noble

Thank you, Tom good morning, everyone.

during of impacted from the of the of positive three the but half our effect contributions in for each Our by ventures underwriting XXXX and saw encouragingly, results meaningfully testing pandemic, engines Markel first COVID-XX we second the quarter. were

to continue at both quarter. will balance While liability influence end second was sheet, the condition asset has strong the of and and our of the likely our financial sides COVID-XX

to take that presented well opportunities are We advantage are specialty of positioned being insurance in marketplace. the

underwriting for writings XXXX. first XXXX, compared growth was compared million This increase written of XXXX increased an of personal at insurance to XXXX XX% to at billion increased of primarily and primarily gross were of lines our written million in which professional increase increase reported within the of held results, within billion as general in written segment, almost $X.X marine to to $X.X premiums half $X.X related Looking our premium due to million. This XX% segment XXXX XX%. Year-to-date higher in liability, premiums in roughly our gross written insurance entirely gross an our XX% due $X premiums segment. liability, in Gross both XXXX. and written volume retention reinsurance our premium product XXXX, and consistent energy lines. at were premiums $XXX Earned to

to consolidated six XXXX. a XX% was in a compared combined the Our XXXX for ratio XXX% months first of

an we second reported for the to ago. XXXX, For the combined of XX% quarter year ratio XX%

consolidated loss. of estimates first six XXXX These combined As we recognized of loss identified at ratio ago, million losses quarter was quarter. as were our proximate changes a expenses points. COVID-XX cause the the losses policies pretax net during for adjustment increased quarter for There and $XXX COVID-XX loss discussed no months first those for during in second a XX we of our and the contrast

estimates March initial directly to limited and reporting. COVID-XX reflected of end losses of Our claims attributable the

in gathered significant continuing during in additional while reporting the pandemic, the were quarter levels after quarter. our caused the second considering increased of However, and claims assumptions the monitor activity actual disruption by second to no through changes data there

the written are the associated our subject specific to our fact may COVID-XX, reinsurance business that where reminder, and and event as of attributed continue which associated well within our include COVID-XX insurance protection, operations, losses primarily the of cancellation business Due our with to coverages the assumptions inherent related from variability. duration and for exist. losses coverages, be economic a factors to pandemic assumptions other things policies uncertainty mitigation international with estimates impacts loss interruption evolve, wide to to exclusions as primarily As range a no surrounding and among liability, pandemic

to pandemic As to losses range liability, losses product was environment. prior emerge with With broader Compensation noting we an of indirectly evolve, coverages our reserve year provision offset pricing lines professional regards credit lines. a significant with related exposure in in that Workers increase and the To COVID-XX improving loss is quarter. to second associated any date worth among likely will It pandemic lead compared losses for $XXX consistent within others, including partially loss year the reserves of our with our a first developed the of increasing $XXX of development, XXXX favorably and seen losses no associated reserving indirect of exposures expect development reinsurance trade by to million in COVID-XX continue prior are not indirectly to XXXX. favorable and half to these we've in incurred philosophy, secondary product explicit evidence year COVID-XX made prior million overall for

COVID-XX results, the we in in investment mentioned the the timing long-term I given second related as expected, our to losses economic see in the gains to to our calls prior of be the equity volatility pandemic. focus, is and continue markets to associated Turning with investment quarter uncertainty variability and

interest compared our investment in million million rates, million. million XXXX to investment increased compared our for half of portfolio, and a the maturity XXXX. the With significant we during $X $XXX largely million value were XXXX in net decline recoveries securities from $XXX first regards first year-over-year net in to resulting reported of holding of of year, $XXX lower net the lower fixed the gains last during to $X.X maturity from income, is This Net in in in interest the million the the increase taxes investment in of half second investment fixed of XXXX. to the reflecting the half during decline portfolio losses short-term $XXX unrealized of first year. we due meaningful fair an value rates first first declines XXXX quarter the declines fair Following equity saw quarter, of gains

resulted services $X.X businesses. the contribution half in our late Building Ventures revenues our April within businesses of from completed Now we results billion VSC products year. acquisition billion I'll of the and from by Markel which the Higher decreased of $X.X compared from reflect in our offset closed first lower last was products the & Lansing and Products, COVID-XX $XXX in XXXX Revenues for Ventures year, within Security, Markel offset during million for last disruption to from segment. compared second during our services partially revenues the cover Ventures revenues in revenues operating our many economic to EBITDA increased Markel the Within to partially were our our half of Fire acquisition Revenues businesses the certain of of Lansing business. of first reflecting the of social and fourth lower businesses XXXX quarter of by the caused million the which impact quarter. demand of contributions of $XXX XXXX. VSC, businesses,

a million comprehensive loss in income income the $X.X net first million shareholders to year, compared consolidated $X.X net of common the to a XXXX at Looking comprehensive the was of first We loss at results shareholders our XXXX. shareholders compared for net XXXX of to year XXXX driven of $XXX our XX% by half for compared billion common half effective to to was $XXX half XX% tax for the loss, reported the for of , rate first in million to XXXX.

assets Finally, the by the several capital both for effects growth offset activities for was our ensure the due all I'll end insurance $X XXXX for compared importance higher $X.X intend holding offering. balance The company and at make lower the segments $XXX which the Net a XXXX. Lansing of and assets portfolio in million value the fair the as premium cash million strong operating of decrease strong at was and half Operating of times in few proceeds XX of XXXX. of in Invested for our was to of equity provided to XXXX flows, uncertainty at our and the past as compared sheet. on in we as as the first holding we've reinsurance resilient the billion again million used comments COVID-XX, claims shares June reflected a cash funds to $XXX well partially over collections liquidity Markel quarters. segment cash to preferred balance activity our sheet were from flows acquire long-term. We impacts the recognize to to decrease related settlement of of insurance by in and company our seen invested

liquidation the we began X% fixed per of taking the rate May aggregate of to value with needs shares ongoing March million. an In preference XXXX, A liquidity volatility, maintain of against net noncumulative $XXX in early reset manage to no proceeds million after preferred par and in and addition our capital for issued $X,XXX success, share to $XXX expenses we Series

grade credit XXXX to and a results. We end comprised from insurance million ratio investment average meet senior our of should impacted in of AA, maturity quarter the well specialty in continue $XX.X stood We of that positioned XX% the surrounding fixed at have Total unsecured quality shareholder's ongoing compared capital high attractive the securities year-to-date opportunities the see a maturing debt end continue as rating the certainly until was of an end to debt liquidity we're believe ago, million to unprecedented COVID-XX with year-end. marketplace. total of maintain no July at to needs June portfolio $XX.X we unchanged our events of of we capital and to a the Much including equity growth supporting at June XXXX. operations

turn to building actions the to to years current of the arising one taken companies. more the Richie talk organization we're the to from we've to through diverse help However, over world navigate that, well our With insurance I'll efforts will positioned this trade us our pandemic uncertainty business. continue about and build over it

Richard Whitt

Thanks morning, Jeremy good everyone. and

more of first XXXX The years. been half and volatile full eventful has than most

impacting scale executing and building took in its we second were well adapted furious first fury dedicated COVID-XX industry, XXXX. a community. cap-like quarter momentum and have as entered comeback fantastic we We hit We quickly employees, plan a quarter. the with every on until our geography Thanks hit, we staged to we that unprecedented global in a

on to as still While We preparing require up XXXX ground from significant there far can we believe we focused best control months. in make what that the recognize next six person This the possible are loss. over uncertainties, is year control. those can we underwriting will staying not things for a our significant and

direct estimated adjust or is not to we As we've COVID-XX largely to require fact not negative that provision the mentioned would COVID-XX the and that and the nature quarter. evidence we being $XXX Jeremy are with seen range materializing COVID-XX any Despite This and for of estimate. made the to we million fact assumptions. did potential related pandemic uniqueness line than losses to either reserved Claims the are catastrophe outcomes our ongoing seen. the changes in direct original positive us our of estimate, second no largely as settled that loss ever our wider our the due COVID in we've change original is reserves, the means original

the underwriting quarter with of discuss program insurance insurance-linked segment, the XX% quarter insurance up were services Since operations, for our our written I'll securities national our our operations Now million $XXX compared state XXXX. which to starting businesses, include premiums or second the gross operations. and

impact more year's prior premiums for is XX% a year's year in insurance for continued segment improvement months, point general million compared and was driven current a by primarily XX% growth reserves, the The ratio a offset six seven growth last ratio development The product months and direct business new a along in liability expense was six-month was was The premiums COVID-XX quarter by within favorable organic XXXX insurance lower favorable in Higher property were the increase $XXX ratio COVID lower on The in rare first in the was and primarily products. a and products million quarter. was first year prior loss development losses was marine increase and ratio $XXX segment point by or for property accident the quarter our quarter both year. favorable year's increases loss on million expense trifecta. This combined by of energy of our losses, the prior driven driven losses professional combined segment quarter and the The combined ratio. first six loss from Premium For impact six ago. in development points both and our increase impact The lines. combined in the insurance our to ratio up exposures period accident or for general lines. partially on professional year XX% same first recorded insurance liability had our by with rate in accident to an and our growth for prior $XXX an of for earned losses ratio liability unfavorable versus accident XX the XX%. favorable the eight months primarily the and the liability on ratio. on second attributed this driven the

professional -- higher in to to and both at that volatility. is our catastrophe this our product premiums for are reinsurance line to liability written with in favorable periods strategy offset to the premium we Turning the quarter and premiums compared reduce property due flat our their segment, and natural year the same lower line XXXX. aligned differences gross In written our by saw premiums adjustments quarter, timing in favorable line gross

Compensation For by in renewals. our the gross the year, surety line higher large premiums credit relationship driven by lower premiums offset we of saw in largely a due timing to Worker's

six due lower by lines. results and for both compared deals year. the The a primarily benefit lower point significant first in was with same lower accident or As decrease a renewals. year the current to expense for the by The for The COVID-XX the of profit-sharing in can of reinsurance in on decrease point direct reinsurance of XX% reinsurance driven decrease months was ratio loss $XX ratio for ratio we driven quarter, versus expense. combined was in our ratio was earned cost. last XX% the combined segment five expense was property driven to first The by second primarily volume the volatility expense that gross our improved year. point significant acquisition by The premium product higher was and was to driven premiums, recorded The the loss partially ratio due XXX% be individually increase for to in ratio. higher along lower by expected losses XX% segment of timing mentioned period the due seven offset each loss quarter quarter, million segment the ratio six ratio

on was other within premium reminder, driven reported I'll ILS our quarter touch state the in program for basis adjustment. services expenses and of with cancellation our program, a year-to-date for large results. on and state gross Next one and services premium operating national enforced operations program unfavorable onetime and and operations national, ILS a services our by program within and runoff a both which written large volume revenue another services are as program of Starting operation amounts down resulted the

a written gross result our revenue for year. the a for expenses saw was Ceding national's the quarter in state the of flat As operating quarter We expenses. reminder almost all improvement ceded. premium fee profit-sharing and of is lower as

our with growth to ILS as management by the has charged a from associated reduction X% growth compared Operating up been offset startup review from and to prior fewer CATCo, a to continued in to has internal associated by our insurance ILS our lines. Markel partially Nephila fees are for is prior in professional very commentary; a I'll increased hard date Nephila lower in being offset on is AUM and entered ILS which most X% market some due year. with the with operations. fees and reinsurance operations ILS from primarily combined from MGA clearly fees it's reduction operations our and year period, the year's ILS up finish Nephila, driven partially result with decreased Turning which both expenses fund market the coming management a That of by costs our side-pocket. retro CATCo were manager line from we've quarter expenses for year, and prior Lodgepine. operations, -- the

are liability the inflation, litigation the the Areas potential general around driving impacted significant regulatory pandemic expand the industry's in liability, the elevated or financial of are market concerns factors for and professional COVID-XX volatility, social end exposure. historically natural caused most would Some those by increasing rates uncertainties rare activity recent are rates, line. that loss the factors include hard catastrophe action recent and insurance and interest property low market most

the Most with Comp seeing time all are some in increases now more improvement terms, rate currently. lines Workers However, exception hit rate with lower momentum classes those and/or than the lines rate rate volume of lines year last seeing of increase premium form are increases These strengthening our that hardest by and double-digit saw sustainable. of compounding in pandemic. that largest are this increases appears offset

an under economic optimism. turn the Compensation had really to Thank which over example any unprecedented entered our of you to year Despite pressure. and hit today Tom. like businesses, by second are As been Workers' and continued closures small on disruptions, business I'd with and the uncertainty, hard half those business focused we your the time now for it

Thomas Gayner

rebound that and for pleased report in Richie. we the I during outstanding the the negative you, Equities quarter a loss XX% the to the in Thank second following investment quarter am quarter. during our portfolio year-to-date. first X.X% to XX% you rebounded meaningful experienced

all Markel X.X% lower income was expenses the year-to-date. high the within continue quality. We credit overall operate the levels of our interest The Corporation. rates negative investment given credit of after in commitment from overall context long-standing return essentially portfolio returns no mark-to-market the very our for and XXXX always fixed total effects to to on losses for positive exchange earn Investments foreign portfolio

we total to as the insurance now capital Our operate capital right support our investments the of the think need returns. our businesses best attractive we We decision as to is that highest operations. well growth can support and insurance base make allocation produce current

up are insurance going As paid risk. being we witnessed unit the second in prices per quarter of more results, and rest are

of priced better like business First to writing more and and us capital now. at best looks right use insurance Markel foremost the

opportunity to we effects top underwriting and our to insurance-linked premiums our returns first our on operations, equity the the well decided current our as from ventures during as securities grow market insurance the excellent equity the quarter. of and the of of in Given exposure publicly and portfolio second during and uncertainty. early tangible insurance businesses, the combination experienced capital of raised acquisitions addition to grow managed our days we equities quarter and negative rally reduce us preferred with current operations of take puts Those to opportunities the to $XXX of the levels advantage the sales full of of condition traded along our million we

to and with opportunities Our businesses step returns purchase fair process of with decisions sale managers by and long-standing good looking debt, and by individual continue equity equal reinvestment not be with for our on much and measures integrity at driven talent of four run prices. discipline capital capital

XXXX While rapid those is of reduced in COVID-XX we pace, remain the that a cases durable. principles of changing We companies. profitability circumstances believe the many relevant believe several long-term world and the at

We infusion cases crisis liquidity In that at financial $X.X of current billion. compensate we Equity June invest cap by according. world also our governments around net we for billion is following acted XX At stood the equity which that $XX.X $X.X insurance think of rather of concluded the ability would market shareholders' write the we into XX% involved. us of the prices and that approximately at many sales alter risks in markets to billion. of

maturities at short-term and longer-term cash, stand Our fixed billion. $XX.X

increase our continue going to reflect stance inflows and expect insurance. to the cash during increase premiums balances to investment the insurance of of should forward. this period options That fixed growth build serve income and We to

volatility over profitability for Markel all the and as to recognized dominate gets insurance capital continue generate and landscape, opportunities likely risk expected the well-priced of uncertainty will time. While future

ventures. view We of revisit our insurance, risk-reward as investments our balance allocation will the or changes in

way On and of and income they look ventures, now, swift us unprecedented continue have for change. businesses build to fixed conditions the cash few the that proud to I'm dramatic the the over right and until our last changes months. balances adapted to extremely For

earlier, of compared and billion $X.X result Those revenues last year totaled from totaled $X.X in benefitted million compared million without one mentioned in VSC cases, COVID-XX Building by of to to EBITDA results deeply year. first of Lansing In I Products. Security a Even inclusion shutdowns additions, the Jeremy months those of Markel $XXX Fire conditions from six the in As month $XXX customer ventures XXXX during extreme the patterns. XXXX. am unprecedented encouraged and managers many for previous & billion changes Ventures. as the result results faced behavior and ordering

people Additionally, this incredibly ventures throughout and Ventures keeping to to not and no out challenges. time. their procedures all the Those We adapted we operations they proud and new means am the safe manufacturing by workforce the customers. service bring other I the in customers to any the testament in near-term. their serve our businesses woods, value companies field do a each I of challenges think of how and continues but to stands the and require continue anticipate the are XXXX Group performance of in acquisitions at

the We and opportunity is support business. in continue the our capital insurance allocation to that current growth to decision think best

ventures operations. insurance We engine well believe and be our continues to investment strategy by building Markel to of excellent diversified continue that served three

use and for appreciate and to to can your support partnership While that, you to when like if get get COVID-XX years answer the in quarter. your improvement to negative you unprecedented quarter, we Operator during We to of line a much here report we'd from eliminated that the open created as we and rebounds the future diversification word look we're now word normal forward thank to With benefits we this the cluster usual whirling questions. very there. pleased you and long-term the questions. first and

Operator

ahead. first instructions] Mark question is SunTrust. [Operator Go from from Hughes Our

Mark Hughes

The of a and sense in overall there give of outlook assets your this could activity? ILS you business us terms

Richard Whitt

Yeah Mark, Richie here.

outlook the positive. think I is

incredibly I as this situation commented becoming asset basically on on decisions was unfolding that we they as were COVID-XX allocation of quarter last the think the volatile, were I think frozen. I markets think people's call

of in are as seen see there's rebounded due additional People AUM comfortable getting uptick more more we so mandates opposed year. hopeful and to in in the an second diligence calm conversations. the half definitely the have of virtually their very in that have as on-site markets, we're doing things little As of been terms we with will terms

So today back it in feels did very than March-April. very different --

Mark Hughes

the the the line? GL described And the social in been issue very you've had concerns of Is but good opportunity. of about seem then you favorable in as the in a a business insurance inflation expressed now much be operation I lot growth an development a you you and There's writing think to inflation, GL quarter. social as

Thomas Gayner

seeing I started. inflation, Again just doubt we every and aspect social about COVID before social COVID-XX impacts were COVID-XX but to there's no life still of has we changed time inflation think have get some to see how

-- inflation portfolio increases terms of were ahead whatever feel aspect we'll our given don't I rate where in we're How the we seeing think but was is of be pretty out social and giving the I level seeing, level that of going given there of of comfortable rate probably some plays inflation. increase, social on. running that would that social now I know,

Mark Hughes

on And here. Workers How near Comp of then finally that? has at stabilizing there see you in the been do maybe point some discussion that future

Thomas Gayner

in shoots up. May had going in some in opening of green June, hotspots some some backwards states but seeing were obviously cases developing, terms and we we had Well, considering and we

on what has terms on Comp bigger the the and so premium far paying What Workers we is looking impact much So impact premium line impact see the policies the that canceling COVID-XX to either returned, people I in of seen for top i.e. we've claims. line. on have is i.e. that think COVID-XX loss Workers or the the line being than Comp impact

held face better up to until headwinds think well, COVID-XX Comp under the but Workers going situation reasonably is it's has So our I control.

Mark Hughes

there pricing about How in comp?

Thomas Gayner

Pricing has been Workers have just the so down good in quarters because been results for Comp. several

that some say there this particular, It is the small been just that's we COVID-XX. negative being still businesses in have is to at focus would business offset pricing by think pressure business is hit small pressure on I on by there is pretty and I point, obviously less moderating, out and extent but moderating. probably but we hard

Operator

next Schmitt Go Our Jeff from William Blair. from question is ahead.

Jeff Schmitt

good environment few provides in the maybe that lines, lines. mentioned growth details quite a the some you rate had behind more some really double-digit of of You just increases and seen rate could highest numbers obviously

Thomas Gayner

property liability, that's of liability we're Obviously and you've reduce getting flat pack and We've net approaching professional the that's are of fairly XX% the means seeing what part are the in our is highest of reducing rates probably of General our leading pretty this think solid to in two been Some mid-teens but increase, actually which is and seeing exposure property, plans probably been with been we're rate consistent casualty areas heard I those calls. -- we've we're been cat sort other sort we've areas. in rates. volatility. on

think We in seeing the why rate and you're have first I increases grow half at seeing always is of we're year. that's growing biggest of we're where the that right and been that and professional big writers the us growing casualty

Jeff Schmitt

grow? pulling could pandemic the be EMS been the pulling and more by [ph] pandemic you even opportunities had back, there the to they been then seems [ph] And in Are had more from like hit Okay. voice AIG particular more it back, seeing dislocation

Thomas Gayner

the probably the are highest prices is three clearly those areas, Yeah are there. in sort there I and of dislocation think the areas

even casualty, a in So as property. of the things level It highest and I is mind a But professional without in COVID-XX player COVID-XX that this increases we areas dislocation, part in suggest obviously of obviously that's in pretty keep over those direction the in of of items a those significant moving before but ENS of business as result doubt, were it, that big areas. about. players in very inflation seeing We're London. are would big other talked and we're both social

Jeff Schmitt

losses catastrophe any there in quarter? Was the Okay.

Thomas Gayner

sort Absolutely, big those some we certainly losses. call catastrophe have of would have to losses, did an not had but but catastrophe we termed enough nature, out, we attritional

this in point sort again, more had not and call as question, to some I'm we big those in results. had also specifically attritional those anticipating nature yes see of and We just losses, commotion At we out civil our of well. enough the an

Operator

Fox Our John Go Management. Asset is from next question Fenimore ahead. from

John Fox

the was why the materiality, but just I'll ask weather on. disclose to in What's you protest I have didn't on move any you threshold Richie, quarter, you it? will that losses going or

Richard Whitt

specific out We being larger $XX event we number million numbers. don’t break have any it that John, to we in than the would to would before $XX an want but see million,

Thomas Gayner

not interrupt I actually want see larger number. WE Richie. to that might would

John Fox

Good point.

Richard Whitt

before level get $XX million in it results. $XX million we need of sort to that Yeah the call would out to to

John Fox

So kind your in losses just year being business. of those numbers and include insurance accident that's the

you didn’t out? So break it

Richard Whitt

Exactly, things, something been those it it else. would've been had

John Fox

I'm like one are on is that Markel said. someone insurance Tom, once All lag, quarter a of surprises correct? the negative remembering reports Ventures that

Thomas Gayner

one One month. month lag,

John Fox

month One lag okay.

So I in of was the and not economic June environment and the correct so April is quarter. May

Thomas Gayner

myocardial of infarction of just exactly stoppages and I those understand right are and amazement some and rolling, of convey, that's day try what ability have a recapture adjust those the to like one and it's done. that's get and managers I adapt things business their what That's to some businesses of some

John Fox

noticed you derisking that a that on doing Thank all quite you're trying you comment Well, so picture question, things maybe I bigger the been you observation, noticed things that's writing to with last looks and in or that take insurance can virus? my you're a years, have And premium an lot you Can you're on thinking the just results not are had have what very because like just it and you the the and the pricing reinsurance of equity the environment portfolio strong more like few those that the I thanks. other Q reduce observation? night and environment reading great. did over I I they're in because opportunities and you. volatile overall and general company great last about my extend the comment the

Thomas Gayner

your drove to I large to you managed question. Well a Sure. extent think

those into exactly factors on. what's play All going of

We the when So this ability first that capital most cash opportunity. do reported that sort fixed off ratio, what as the like on income can of as standalone write just of regulators take agencies kind basis. flavor you're you given second given a investments and possibly the so and XX% to the an XX%, quarter and we reported to rating insurance is much as that combined numbers premium backing and of of

to insurance do can inclined So so spectacularly we write if are to we at XX%, extent possible. the fullest

can Secondly, look of per again of landscape right things would now phrase and the rate the per rate the we used the in terms best use at risk insurance of same exact unit the unit in we world. that When risk of do, I which thing. is Richie

book examine the do things whether of own some on get there logically itself, then to other about you be volatile analysis. and last take we some able the more more to want or volatile. equity less tend volatility, years well some results that's within think everything the that the follow the and would we point goods be to that's against XX% in securities the the when fixed-income And which tend if opportunity of an it's to the can and than cost of and and that we something lines So is more as comparison we're that and volatile compared we rather stuff your [indiscernible] we less insurance do volatile microscope sort volatile less

making. roles if of I logic to the sort we're make think reversed John, would sort So to go that decisions same of you are change the the

John Fox

you and do the add? potential you billion premium of think much that on at on what's the $X the to writing and including preferred, could your premium in terms capital Great dollar increase? tangible of $X.XX leverage for How

Jeremy Noble

to can base. there opportunity in we think I The is we're our capital market and terms continue don't grow. think restricted of I

sustainable likes to us So is my of think is the possibly I've of one who who in it's advantage we the on sure is we day Cox we closer every what Bob take seeing of think much in he and market we're by that as as day. insurance the can. every end our market is I hard the to hard get comments, runs it write of make terms said say our day to operations, and we to want goal

John Fox

earned X% would profit at nice. underwriting be million The very of $X

Jeremy Noble

we're So shooting for.

John Fox

there the the is or there level, still at that that? in And should are in there about think are or Okay. run the expenses ILS legal how rate we Richie expenses

Richard Whitt

so the the is very from that second -- raise bit there's are are that 'XX the and Yeah capital tell in CATCo, opportunity half of of we with into year you, picture even a expenses we legal and still optimistic muddied but the tremendous in terms to business. very our into more I can leverage

able for next base drop does great add so the of lot. majority bottom that the As we really we're to are have should or to -- expense hoping and so months. that's line a over AUM, A not the move XX to

Operator

is Our question Mark RBC. ahead. from from next Dwelle Go

Mark Dwelle

three Good morning. I guess questions. I've

COVID-XX done etcetera some and stay far so, are Could referred First areas the of like well to quarter I going you what terms as I that the business about were charges to that the the might had and if talked ask as and had reserving and you it held generating you you event have is conditions in in last in you cancellation those lines order in Richie am question that you of lighting forth still up and so charge markets? terms took guess -- practice. other to that

Richard Whitt

To writing business but of not will create we're that communicable COVID-XX going loss of for We businesses considerably big want. it small are have trying we extent forward line to situation a this but a those forward. avoid It likelihood fairly we was would little less write disease that what event to us, going the had outsized have event exclusion, that's writing put in event is and when the an very a small the businesses, on moratorium cancellation we it sort broke. write today. We losses,

of property In because most the certainly physical our is property exposure been so the been of course the mix. had COVID we have always virus but it and exclusions exposure the brings. property, reducing damage natural we've constructed, required in for are We've our volatility that COVID, to cap not part is property reducing of terms much policies first, reduce

writing exposed heavily that lines been have today. those the of to less COVID, we're of So

Mark Dwelle

rate ventures, unprecedented you And second strong question businesses acquisitions? asking? so from very mainly I was relates what for the I the portion on ongoing of what going piece of kind Could and a the is you. to revenues was I that's recent for information am came from kind am to the reason had trying in ask very, share the run obviously of triangulate Tom, to quarter underlying and of it the quarter an

Thomas Gayner

I as I Jeremy answer at am question. looking the

down about I and so were the quarter same-store in VSC basis, year-over-year down there, our revenues X%. in on about EBITDA a think without XX% lasting was

that So the rough.

Mark Dwelle

when then this grow, commented particular you capital to last to guess did I preferred talk capital point And about offering that strong in but and ability needed the you through last at question preferred had the you offering you to a felt the position just and substantial was the why gentlemen then you fairly I chose in and quarter just I why a curious the time?

Jeremy Noble

of Couple thoughts Jeremy. there. it's Mark, Hey

financial industry and fact that had operations of We short into was were would be are rating increasing capital see position the also but their were and leverage debt agency we played able liquidity the Richie capital obviously not insurance capital COVID-XX increasing at capital and some was to out May our to focused our of respond market of felt specialty peers of to some that marketplace take commenting add quarter. second regards conditions capital to were structure. advantage to we we've bit for certainly in we May to a preferred the our and is second opportunities and to on purposes structure in on hybrid that some of the time to insurance number it's kind existing We in past. out quarter little similar the With uncertainties across a playing earlier. accounting in the time. a the improving beginning our in extent done was improve looked stock term the that this leverage, and that deploy in and capital it good and So thought we recognize that that comfortable in saw to We the purposes. relative overall that to like at we structure adequately We the and

Richard Whitt

Jeremy's times guiding common protect might at there's their distinctions the regulators care looked to at and of GAAP principle forms financial and several agencies of the add over rating to course and what I years in we some to shareholders as last we look capital what the and look possible. equity always fact oftentimes extent point, XX capital we've want used between at, the And hybrid of hybrid is there capital, take

that to the respond in keeps timeframe specific So that or at are opportunity available of shareholders and needs position. given sort identifiable the back of to some look pay the have the what situation, possible to plain common and meet sort the best equity securities that you refinance that in

Operator

comes next from Stefano Our is question Deutsche Go Philip ahead. from Bank.

Philip Stefano

a there have information the the think this on on forward the probably for not underlying question from that online? could out what are the and these with business versus and benefit we these coming to about expectations guess acquisitions acquisition unprecedented we is the acquisitions the ventures. prior I potential lay the Is impact way

Richard Whitt

an In we form acquisition. we're of going a think always that capital we on make double-digit of returns and economic to the capital lay senses out dollar in

grateful would the short So I managers that and out again to of all be that. I'm the -- just those operate would volatility continue that fluctuating term, way kind very report In circumstances. far to lay the wildly impressed that that's them you and that the longer-term. could as so we're in would way businesses there very underwriting of there and around the

point months given number a put companies just well. the any cash those or and model to I would sense. forward had in up pretty producing for they're a to next where doing when we expectations operating that where of first black, day, the So in wake want I the to flows are to not do quarter find six reports guidance

Philip Stefano

pricing we're we're there's businesses And frustration loss getting well this and looking had I of for getting underwriting ratio about next at or period hoping versus even growing dynamic can respect, that or and are the a at trends quarters in a years loss we're this margin over underwriting not expectations maybe as as like How today -- just mean we it a the but time like years? improvement think dynamics that underlying it of of the increases, cost headline versus loss could five for. attritional increasing that the think and the couple looking what been people look ago we underwriting have some feels and attritional feel cost point at -- feels expectation we over pricing

Thomas Gayner

That's an interesting one.

margin that and of increases a I starting in right is of some XXXX. new I have that received difficult what now happening that create margin Phil. to coming price inflation. we waters a of some what that's now, to mid-teens we hitting we're where all social believe terms and on Let that price me based economy, has in compounding creating that do it the your start inflation happened the believe I what's seen because muddied COVID just on we've that in we're try think -- point social reasonable past inflation against of said any is put and is expectation to right it's social little on that's to increases it's believe doing against that. now I nothing on there. in that the finger terms sort I've pricing that in When I'll terms issues of the in a

be a in some we inflation should -- social this hey for quarter we're bit. I additional be ratios bump likes and down attritional a while, if quarter that's create sustainable say to would loss against those Tom margin to is my see think this So row. market able a hope hopefully one a

can we a we've We're it quarter two quarters a next in one row quarter. So going in if to got row. make see

Philip Stefano

updates I on going missed there? then that fundraising the any and that's apologize last be for it Lodgepine and me the Got if will earlier, and it I one

Thomas Gayner

were until kind significant in not up great one-one January way invest. pretty their calendar on. happened tone is book change to first of picking quarter so we're May some the up. of the that's whether We're seen and book a people I as assess aren’t to quite done of the in That in want to assigned a decisions it's amount had investors frozen into fall. until honestly to their what a going have most due the XX I've Again think having lot the going the to conversations portfolios. they we've sometime just book about that kind through diligence largely a going conversation, probably works, We've commitments amount but of trying I think make the and and to It's said fall

Operator

ahead. Our next Mark from is from question SunTrust. Hughes Go

Mark Hughes

ones. quick liability Any on medical of couple a line? professional comments Just

Thomas Gayner

most the the of used, there what so used there in part than and we a do, part was just said because lines But lines of years with market be much broader lines has ago are been environment. several base we're really it's health and health big starting that the number of is we're Mark smaller it that and challenged advantage we a did but challenged I as of much years what to improving we certainly and improvement smaller of a for is that. become taking

Mark Hughes

better that new that in on part through think quarter when back the a Was the more more of the business basis? quarter written you then and of run premium. weighted And XX% were we up rate and about go-forward insurance your to a is

Thomas Gayner

It's the businesses, we've price of consistent more all hurts our second for good business been both made Whether up guess in seen of impact your quarter. ENS mine. as is coming more first and smaller that's in of in by that than as mid-teens sort relatively certainly and been London. COVID-XX increases but It

sort -- the months. is of that first seems run mid-teens the six So to be that rate through

Operator

like remarks. This for turn session. conference would the closing back concludes I over to to our Gayner question-and-answer now Tom

Thomas Gayner

very We for again talking for much your us. to Thank you. Thank support. quarter. you forward joining you next you Thank look with

Operator

concluded. for Thank now The today's attending conference has presentation. you

disconnect. now may You

Markel (MKL) 29 Jul 202020 Q2 Earnings call transcript