MKL - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to Markel Corporation Third Quarter 2020 Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions].

we Private forward-looking of Securities today, meaning within XXXX. call the of Litigation the may statements make the During Reform Act variety They opinions risks. current on of a are unknown known assumptions and based concerning and results by forward-looking suggested Actual in such differ those statements. materially contained may or from

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

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

Thomas S. Gayner

for you apologize and you happened that that which course distributed of numbers Good delay in this This morning We yet. welcome. the has one the We the to understand and is incorrect the Emily. connected was was morning. call. starting replay Thank not call of the actual

are the fashion. you morning. work of part. able slowed process number functioned see our that are replay a we others a are this the apologize roster error and that we We assembled as us sent to correct email here been and an will in hope and have something with out for and grateful We has join on We that

morning welcome. and So, good

our is am As CFO, Tom Co-CEO, Noble. Jeremy Gayner, with I is Whitt and stated our Richie today here this

as when systemic and The of your challenges this remains that truly our from and customers pandemic claims the serve of face in to you other know and financial associates, to of our not memes, and the also the operations. losses adversity. remain regarding us and follow unlike such everyone joined and wildfires, you COVID-XX headlines anything have than That immense hurricanes of all well I in regularly Those of the and provided shareholders see I losses answering and you economic don't substantial our ongoing unrelenting. as catastrophes but say we proud a things the hurricane pandemic, you XXXX could customers, to major conditions that wake to in you circumstances insurance not briefing natural We've look efforts more costs. just policyholder derecho, we organization I'm glad more year. our are said, not questions. on events cover current the forward in a as spate see We in telling that stem any for recurring its assistance our be and

you provide we of and many trailer, the We've it to by first or our and our investment That gainfully necessary a operations machines not but measured bottom products we've continue to to durability for by provide consulting honor Markel employed bread, customers things be nine promises results and associates. decisions to building and our need nine resilient the basic times. and necessary much capital does get that and be throughout our serve robust We man since desirable We necessary built insurance operations making don’t as we months. the and to results months years bake displaced and XXXX than live from company. associates able to Over work a to at includes day. we the remains technology pace We're our and throughout to be track falling profitable bread profitability to red your of of catching we've accelerated the done system of tough well. built items to Markel together of to make. on operations. shock other a components products diversified the our manage to at fire. three in We've our first services working Ventures onset all operations. keep way, trying fulfill ventures the insurance, and all, progress also the more suppression also services and the the Markel that since will to Those services our to gases which able of in We're and doing to out work the you investment, XXXX day, operations, keep each year-to-date quality and to alone, keep mildly be be keep the the provide doing first floors recognized everything work by we as also insurance year-to-date, increase COVID-XX report from engine to every losses our best to of which convey housing, machine financial quarter everything the reporting improved the We're Clearly, consisting delighted morning. medical from produce remain from fire houseplants for dependably this it to dramatically purpose serve pandemic. trailers the our while to so recovered And of services, and and we many car need truck and brighten We industrial produce our make create drive. these safe

investing, a investing. those While that profitable of pattern conclusions a is and conservative time too continue always short draw multi-year frame to results about

underlying our make spirit resilience stand surmount the shareholders. our they so leaders our returns. Markel in fulfill financial ventures to about We investment results produced this I'll and and to conditions the commentary provides for our and operations Markel, will The I customers, the of performance to linked turn and continue the in work and even call win, conditions of the associates, At win we're as our pleased amazed demonstrates with and to more produce to hope a appropriate three in optimism of At able securities and out on outstanding Even of and grateful believe Jeremy am we and played architecture and protect build and that resilience importantly, ventures out be fundamental review and details going we we figured Richard the XXXX unprecedented with engines to will sustainability operations a insurance of ways year-to-date. purpose the then sheet the will XXXX. we share I their you and forward. accomplishments. adapted update how win, then and balance how serving today. promises engines. some of ventures follow shared our The evolve to also our this insurance point, unprecedented the far businesses circumstances. behind investments Our our our speak of briefly over more

Following that, we With will Jeremy. take questions. that the

Jeremy A. Noble

Tom you, good everyone. morning Thank and

in engines continue Our But of fortunately to heavily the Ventures three underwriting, from third be positive of the effects by influenced the our we quarter. contributions each during results investing Markel saw COVID-XX pandemic.

to an produced reserves catastrophe underlying our natural despite underwriting business. operations increases as insurance of as performance strong well losses, Our the pandemic elevated of reflecting related levels to the profit

investment operations mid-volatile saw market Our demonstrating delivered portfolio gains also profits conditions. despite and their Markel Ventures our meaningful in uncertainty resilience economic

X $XXX gross product XXXX volume is product premiums due increased for segment first first -- $X.X reported for XXXX to to was in results, months an premiums of from million. increase gross X.X liability months premium XX%. compared XXXX, XXXX, general consistent underwriting $X.X billion lines. billion of billion, lines, higher which our personal our at gross growth $X.X both our the nine more and XX% increase written premiums in written within XXXX, to attributable and in in were down the as well nine the our written is compared in rates in of increase written at to of within premiums period our insurance our billion XX% period. liability primarily insurance growth XX% This favorable Year-to-date retention premium of attributable growth premiums XX% Gross segment. point the as This to professional written in were our XXXX, which XXXX, Looking our to and an with our was reinsurance segment, roughly

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

the For year XX a XXXX we of reported ago. combined a third a to quarter ratio XX compared

attributed three points XXXX Our COVID-XX quarter. nine the period, for combined of ratio to for compared the underwriting points nine-month included losses to

I've discussed year. losses of net and $XXX two for quarter adjustment the As quarters, million recognized during this of we first loss pretax expenses the past

loss. of as those proximate and were was cause policies For identified the contracts COVID-XX direct

and million our During loss from uncertainty the product these million the trade our on also losses $XX arising coverages $XX third on of we credit from resulting estimates recognized increased the pandemic. line economic by quarter,

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

a segment, previously impact adjustment our not certain the sample the in interruption given assumptions increased estimate following certain the impactful the ruling third to for by estimated court's of Within finding the in insurance initially a our our in reserves written established meaningfully in made Kingdom our where was loss mostly During business our treaties of we we of did of losses the ruling coverages and judgment business policy completed and United segment, conditions. reinsurance coverage, test losses of case policies was terms policyholders. with increase This interruption the expenses in quarter, most estimates for favor [indiscernible].

XXXX duration XX, increased September at reporting impactful data claims of expected additional our our which cancellation in was also most change estimates pandemic, coverages. Our the gathered and event to reflect through

seen incurred professional the the losses date product during emerge the and compensation secondary recognized to exposures. our to line not the continue as and any losses trade our indirectly these lines. liability In including addition pandemic product of pandemic overall for a other the possible evolve, are reinsurance of others To explicit COVID-XX credit on we've losses evidence lines, of may quarter significant related worker’s effects provision increasing to among further within also product

results underwriting reflect catastrophes. and natural the XXXX nine months to Our for losses attributable of first XXXX also

regards losses included Western ratio [indiscernible] ratio to our Compared and combined of or or million two wildfires With as Isaias, prior favorably included reserve development, compared U.S. Faxai. XXXX Typhoon from reserve million underwriting the the favorable year in reserves Sally, our and XXXX as Our loss one with to prior well and in Dorian $XX $XXX philosophy, year of point nine points Laura, underwriting XXXX $XXX losses million year the combined Hurricane first Hurricane from prior Midwest of million in development loss which of consistent developed to months XXXX. $XXX

in the value X.X equity year results, recoveries billion we the of compared XXXX first investment net of investment decline of following last portfolio our significant to Turning nine $XXX to $X.X gains were in our losses year-over-year declines first investment the seen meaningful during with million, second the Net and for billion. quarter, the months fair have of quarters. third

may decline million first to and we $XXX have first be and markets of $XXX to gains XXXX, the year year. months securities in fixed is the during net the taxes in increase uncertainty investment the of investment to XXXX. interest ago. rates nine maturity of income prior a given calls, to expected short-term due to XXXX part the fair long-term our in of pandemic. Net focus, fixed lower during of variability million in interest value from net lower holdings declines regards reflecting The an we is and As gains unrealized of in resulting largely timing With $XXX maturity see economic our reported and the nine months volatility investment by to rates the in caused increased portfolio equity due compared I million losses continue mentioned

reflects closed we from $X which Now XXXX revenues Markel the acquisition first to April, Fire year. This results Lansing through increase months fourth completed nine revenues of of the quarter billion Ventures billion surpassed our VSC of which the last contribution cover our Markel to Ventures XXXX. late $X.X and compared the segment, of Security, Products, in recent acquisition Building the of & during of from

to result operations was and Ventures caused our Excluding operating of of pandemic. Ventures operating $XXX social the well and EBITDA last as and contributions as of in the to the economic as a Lansing in XXXX XXXX the Markel $XXX of certain decreased months results first and demand nine businesses. growth XXXX our decreased to for COVID-XX revenues by disruption VSC of compared in contribution compared million million VSC, year, for Lansing the reflecting Markel improved attributed

for loss meaningful contribution a loss and the period. Looking year months rate for maturity pre-tax of rate to compared reported net months of a tax the XXXX, results at shareholders the increase months income billion effective nine consolidated And nine both the first to September rate compared not first tax to of XX%. income common on the for a million was our $XXX in effective shareholders million combined tax billion unrealized of year, net the to the when net XX, for was our nine XX% months was to in the year was shareholders with of annual The $X.X gains ago. nine We comprehensive XXXX small periods fixed portfolio, for $X.X effective the ago. XXXX, for of XXXX $XX our the to estimated ended first

were make at Net assets XXXX reflected the to well our for was seen the to as Lansing, Finally, segment company and activities to the end of in change on a at September was billion Operating nine offering. year $XX.X end quarters. as May which of the of capital, compared proceeds at few portfolio, decrease provided company million end. used cash months operating at growth sheet. partially flows shareholders’ acquire fair preferred strong equity comments of in higher of insurance invested billion billion the $X.X by equity balance to our A shares Total cash a million $X of our compared billion XXXX. flows, collections in of at September, compared I'll from our $XXX XXXX end the XXXX. $X.X first past by for several both holding value premium reflects as in holding assets offset Invested over our funds we've stood cash XXXX $XX.X

quality down a of at maturity investment with fixed securities to comprised of rating from maintain to capital the XX% continue end We September our credit grade was at AA, an portfolio debt of high XX%, slightly total average year-end. ratio

notes are attractive our our we to businesses. ongoing We over senior we will insurance meet With well expect needs, to unsecured I talk liquidity positioned maturing in no marketplace. XXXX. have supporting see to to about to We until our growth it including capital July the specialty believe the turn opportunities insurance as in insurance more Richie, continue that operations

Richard R. Whitt

Thanks Jeremy and everyone. morning good

our to all increases the lines. said, already year continued year the saw Tom's all the operations unpredictable and is grow XXXX nicely rollercoaster that almost continuation has meaningful and of quarter. -- in third Despite As rate we in obtained our the we insurance that

was of we an Laura, mentioned, in and and of and series sized recorded losses quarter medium Jeremy also hurricanes XXX to derecho, wildfires. quarter for the third Our related multiple were which Western underwriting Isaias, small Sally, million impacted cats as aggregate those a the the by

million first COVID-XX regards that we XXX was quarter provision losses in up As the original of established our quarter. third the we from in to that million, XXX provision increased XXXX that

some within first of increases quarter with additional those impacted positive, of assumptions High and now been impact interruption this of estimates the largest segment. been the ruling original our of the Court in business direct reinsurance that our information as have event those were that the driver to have some required, increase be expect of our the many revised the case of impacts into UK we related the have we There While availability business. for negative, ruling of specifically on COVID-XX the our estimates felt impact that FCA to also test XXXX half cancellation some

for of and third trade in not reinsurance, COVID-XX the XXXX impacted ILS of operations, within of at businesses. XX to related of Markel. have but We're our were we past XXXX and years, those line recorded losses claims -- impact losses our credit product Cat losses also over estimated quarter all company part significantly As a the insurance, including million provision economic from insurance COVID-XX four indirect COVID-XX. our

over the volatility future our We insurance that business will of reduce four-year As we profitability our a items consequence, impact believe have for and going designed we've but period made last goals missed number we've results. that our the underwriting could will potentially to strategic as a the forward. changes result of results to continue and over changes make many reduce quarters key the implemented several

of unique and and on about assembled, we're Make market happen. and the Given capabilities insurance current more moving put no but board this we're points opportunity bullish we events our mistake, to the strength the and to are and going pricing the forward. trends realists perform is for have

Our events goal lessen for underwriting results occur. that impact and is the stronger inevitable will account to deliver their to

operations, include national insurance Now, I'd our and operations. program like to which securities underwriting operations, operations, discuss insurance state services linked our

off I'll XX XXXX. Gross quarter X% So up with quarter to kick the the million insurance were premiums the segment. of for or compared third written

and with nine general liability XXX growth XX%. rate lines. by in the for line and months, or professional the months personal increases both premiums quarter our in nine For our continued products, million was liability Premium growth up driven organic were along growth and product

in and lines, by the favorable development segment months lower liability for the the ratio quarter on impact and same attritional from first exposures nine increases. losses on favorable primarily point a segment lower by opportunity our business. our of year-to-date and to to ratio and rate of to the an to combined Higher lines in ratio liability The ratio was prior the related programs for accident impact premium certain again taking increases third two and expense increases this and and expense by and in XXX% was attributed lower year the increase most profitable due underperforming ratio lower ratio. professional in had was and exposures, written compared prior point unfavorable driven have remix ratio product property management, where ratio. one the The insurance the XX loss September of XXth, COVID-XX insurance our combined lower decreases partially our increase a COVID-XX We're product -- XX the impact product a for in to lines attritional XX% to losses. our of a both in a points That due The we The partially point These and insurance in loss loss period loss combined nine the within portfolio the portfolio years discontinued point attributed earned certain product by rate writing offset offset an activity five lines ended due six property lines programs. last combined of and to lower losses in specialty ratio the driven on loss ratio across market versus within cat of several these XXXX, our for impact ratio. for active part year. economic segment primarily increase of expense quarter were general attritional premiums COVID-XX quarter gross the year’s by increase were increase by driven premium to losses in was due impacts premiums point two cat For decrease partially offset our to to ago.

the this we cat single reinsurance weeks the property market. in us operational the cat competitive of property market while of This believe with that win that and center creating Nephila do reinsurance the expertise risk We a entry cat global the point property efficiently capital, by Nephila’s Markel strategic are property to more ago for that global efficiencies. allows for we future also generating position cat leading having going who the that and segment, one is move our Markel’s fully are in us to closing most move those companies few unit Moving leverage help market. will announced become serving to reinsurance connect market

general In increase its year Going periods Markel written President its the both the premiums in business rates the in lower premiums our premiums underwriting premiums by we on Underwriting and lines gross worker's primarily business, the to And decreased adjustments offset focus within the higher leadership that growing to property saw new casualty impact Rhoads, our timing lines REIT for forward in lower global compensation under lines of lower and compensation. Chief on and quarter same Gross and to written due workers higher and and liability renewal of within slightly Officer. due renewal property. quarter XXXX. will continued premium compared unfavorable specialty Jed in

of volatility loss gross was ago. adverse A be XX reinsurance the significant versus XX and increase the and to on from impact worker’s ratio loss XXX to reserves. year prior losses prior favorable adverse The XXXX. by development by that XX to and increase driven combined point point development more ratio volume cat development professional compared for of timing can This and favorable product was COVID-XX. period product to one due is point year. development As the offset segment favorable premium compensation a line in mentioned on segment more liability by point due driven to ratio attributed offset combined reserves. year year. loss The lines segment our in the favorable That ratio three the of accident favorable last due line to previously, development XXX reinsurance development seven for favorable impact prior due year increase prior in losses increase from was property quarter year in increase expected to was offset increase attributed first year deals our by loss more losses our increase COVID-XX, significant was losses reinsurance and combined by the the partially increase XXX individually point a third this the ratio development point in in to for partially was our renewals. XX last due in entity cat experienced in The nine combined a months same for expense product public in development partially a on year versus accident the was lower The

I'm program and going on Next, to our ILS operations. services touch

reminder amounts ILS a program our operations in services from other As our are expenses revenues reported results. within and within services operating

with one written in quarter in for So first adjustment runoff the program, of the gross premium both unfavorable onetime National, of a large were large another driven basis end volume down operations that resulted of program service this year. starting quarter cancellation year-to-date which force and by State National’s the the State program premium in in and was

have new move gross of While and we we've we a written programs, a that seen found business result as premium new as activity coming number encouraging these programs forward. two is online down of are

a almost also in for written premium the past the reminder, is the the year Ceding volume services gross due division were revenues written to premium down quarters. both lower As gross fee over our ceded. few program quarter all and of the

the and and our fee our assets in side XXXX have result for in as during our combined increase billion fees operations assets released. had fees from fees due securities operations prior to CATCo management quarter well management pocket down wind the ILS ILS impacted AUM are for year’s side management some fees the Obviously, September lower as those the by to redemptions roughly in management from until and set an to XXth. up occurred in Both lower reserves periods under of charged deferred period. Nephila investment quarter, to down. Revenues down winding income. loss Moving the a were revenues which pockets, reduction lower the that operations, nine-month due the decreased quarter linked as XX% and from of net for we that in and cats third year-to-date insurance XX.X X% management management on the as operations were and impacted at quarter

to with little social lines offset both year of quarter as trends operations discussing a economic of increased up quarters interest investment from we activity, COVID-XX and expenses multitude elevated Operating operations. compared by than higher as Nephila the all persist happy the believe are previous Nephila rates, the For see when will ILS from inflation, revenues fees year-to-date that decrease revenues more up pick for this to their a XXXX. management momentum pricing to the questions. Higher continue losses, bit such likely our cat growth momentum been and and our quarter. with costs line the operations. of operation. throughout legal I'll of the commentary continued third factors, low and to with impact operating startup and NGA prior large associated uncertainty as in in almost associated market result year the are in operations with continued obviously settlement Nephila We we've that we in due to the a expenses that The get price our the in finish all CATCo the NGA

will businesses as from believe recovers the impact also COVID-XX. of the benefit economy our We

I'd I to that this businesses portfolio, goal. it you want now shown thank While opportunity have XXXX employees over are start small which We're nine disruption, a medium losses, to have like opportunity. businesses need want after now thank under for hard profit. last year resiliency with marketing so going all have we large to part economic to finish COVID-XX and of our underwriting up, I your a sized adversely and worked Tom. these to who've of give with weeks over to today meaningful push sum the impacted. to difficult to us definitely hard it time an to achieve to To the turn our brutal conditions been an to

Thomas S. Gayner

we investing role important Thank operations and current allocated investments I positive I In point our sheet on effects. on returns for X.X% return after in total balance earned Markel. the this am you, portfolio and all income equity FX the X.X% our and pleased fixed expenses of is X.X% Richard. our believe environment. of preserve to most for a Strategically, the with that protect at holdings

would return The We level preserve make today, our Given in and risk to views me. between different decisions and about don't a duration, cost risk that of we appropriately opportunity offer seems environment. think taking meaningful or types our many paid different low very our other options on quality on trade-offs the general stance current now. of high of credit, to right for investment that we focus believe liquidity get

relatively The able stay liquid of compensation for to returns excellent. earn their opportunity to more is be ventures disrupted when ready ventures associates and respond to to our conditions. and to clear, and In business and grateful deploy and I operations we appropriate doing customers. teams the businesses professionalism want so. will cash such the As their superbly and see rapidly I changing am their continue and the news amazed to at skills, and dedication managers aggressively

This based. a of million increased record XX% compared For setting billion the months, to nine to XXX ago. over months year a just to compared EBITDA for ago. ventures X.XX the XX% grew performance year to was X broad XXX billion, first revenues financial nine million,

entire validation the short-term results that They service full not portfolio cyclicality While I of and normally Markel experience of they factors. value diversification. what of group many the this economic a as expect array serve recent businesses and a value results from is of industrial from think most said do. quarter of unlike from leaders Ventures our the Products, market year's an different future customers variety are timeframes. resiliency operate Lansing acquisition of when Building from We the investment demonstrated dramatic wide stand the in and first what We variability volatility to and and we purpose look results, their of we of Markel at overall this our experience That would Corporation. the

with year Markel For call that the dealing for I'm don't a quarter the reported months ago circumstances XXXX, pretty my your from million I checked worldwide of I in years remember reference, from XXXX, billion. the five didn't we year-to-date Ventures sure it and exact of and nine first include from conference pandemic. of third XX EBITDA and notes revenues conditions but economic XXX

at build build offered in mindset so our resilient some an win, you short-term companies. to our your some to open With Emily, you this of we that about Markel if efforts love morning be the that, seek enduring unfold. as the great and answer you'd continue progress with to we've one to world's win, of hopeful I'm long-term as to floor, evidence and confidence Our we'd win questions. system the kind provides

Operator

[Operator Instructions].

Stefano go question The comes from from Bank. first Phil Please Deutsche ahead.

Philip Stefano

and good thanks morning. Yeah,

insurance premium I your of the the early from second think can the the growth, surprised decelerated pricing what that part the look about why to and take would not given in help the us remixing are on year? taking growth feels long the in was Maybe see the and Just and this extent we're pressured this just line going business. market next growth we lines of thoughts of that I extent the some volume, and explanation which back double-digit is market top opportunity the the remix guess you opportunity XXXX, business to may how like had it to quarter

Jeremy A. Noble

Sure. and we classes, impacting green our growing Thanks, quarter, in Bill. the Yeah, were the was the call what focus a one but are third third I mean, different we opportunity taking to classes. profitable most particular things really lot of quarter there on remix

closing goals. of we've meeting -- didn't goals, those that think down, been closing wasn't moving I our programs profitability So in some become very we business aggressive that this from away meeting we've year of terms our see down

And had July really to Also us and a quarter. the year. a X. impacted August, third in for they of busy is July that be this tend that big date we continued us X that's third some for quarter, sort and up September, the good add of to and less starting months

And say, in economic all all, pay than into was small with the businesses. that the extent third fair quarter, greater very struggles some been the have stimulus all months, impacted, we parts of to premiums third the So quarters I'm maybe we a in two all to And amount the used had by doing. saw first given of business businesses. think the that I moving to that the growth wasn't are things massive economy some pleased we Also, in quarter. showed and larger in the there the it's think, six first I put in the

So the we you, not tell it. particularly very about that and of October our concerned I'm few strong. a in I they're of bit saw but a far little quarter, third We've seen numbers would so for

our grow in grow goal in XXXX, we going XXXX. to be you say that's wouldn't double-digits to So, certainly double-digits why

Philip Stefano

trend, look that the that a it. and But a in in of thinking a benefit attritional presumably and as with understand development, appreciate help got sticking insurance not for any but going us to improvement the COVID, in but cat there lack ratio, economic remix well. a frequency company. Can the about COVID I when versus pretty Okay, benefit loss performance. at contributions that's losses have from underlying potential And and for rate was of the you good you're business,

moving bifurcate you understand kind help So, just what's here? to going us if these pieces of can on all

Richard R. Whitt

I'll gotten We've a our are increases do year-to-date double digit, best point. I digits double low can. this where rate to point at the

rate it. of remixing it. The of certainly part is a is a part So, also

that we We most classes, lines are which green again call classes. profitable in of the our growing the business most are our

shrinking that in classes that some like see. that would and haven't are we profitability we We saw the third quarter seen the you to

know, very as in make is saw And far things those goal all nice what year. stop attritional but are like that And in from we so looks the result being, we yes, you ratio don't to a the loss events, the go XXXX. at play. decrease into the sure for So,

lot of from unfortunately a prevented pretty performance, last years, has been prevented have showing what So, been that cat that nice the has events for in some ratio. underlying four combined there's our up

of we've and a reduce of the to but so, hopefully for And number events. steps mitigate been those taking lot

Philip Stefano

will little you appetite for your just could me context Okay, a I outlook and grow hoping and was on XXX last for to [ph]? one re-queue. then provide I reinsurance in the potential

Richard R. Whitt

lines focused specialty about rate and seeing increases in Well, do the now programs. going seeing to talked is think grow. is be general and global opportunity to specialty We're liability we're an on reinsurance Markel’s our I increases. and we lines, obviously there casualty in reach casualty

is And that new obviously some increase be of cautious in just riding, going We're then. some rate that or business. is of increases the of but also underlying to that some primary We're business.

We over to couple haven't profitability the have years. see seen those two the of last in wanted we areas

it environment. convinced we'll profitable, it's to foremost we're this sure and making profitable it's look grow and first So is in once

Philip Stefano

it. you. Got Thank

Operator

speaker Jeff William next Blair. ahead. Schmitt Our is from go Please

Jeff Schmitt

creating don't of just Could impaired, morning. environment if the Ventures, economic I are good other you or temporarily M&A be of if Hi, you're -- guess this a wondering in speak you tough I if opportunities targets to looking conditions I'm do popping where some for situations may up sort partner, opportunities environment? here for Markel know those the types

Thomas S. Gayner

transactions of years, is not a Thanks, but of looking the I lot made done, head, been the We we rubbing have a have being outgoing lot Markel or Frankly, spite off at do a our it. attracted Jeff. to our or and at M&A Tom. lot grown almost head, would four businesses ourselves. say term some of This prices over observe last going we're we're we've but hair there's of nature to not that the three solicited calls long scratching of things, so, valuation. in

kind happen go you the out we're probably I watching will someday of So by. the lay parade circumstances think but

Jeff Schmitt

then profits up? building we obviously lot but and now it that acquisition, ton too, that struggling from is was up Lansing that revenue is from on Lansing a the were Markel profitability I see in guess deal, up could so is or Okay, products Ventures a pick

Thomas S. Gayner

across No, reiterate that is yeah, I the profitability that want to board.

or at Ventures just circumstance. way describe to and grateful I accurately my operations. So, yeah, the amazed again, done everybody's the hats feeling and people a take that but -- Markel two COVID in are the just managers They've another off words one the

a concentrated I not mean, that in pick-up for any Lansing it's Obviously, of one that's business. pretty So is is big revenue because place. distribution where kind the business

So across group very board. the Venture of are EBITDA disproportionately on capital to The rest businesses. compared The relative Markel set to be high is the of the it's doing would but revenues similar, well. returns

Jeff Schmitt

the that think was size Okay, and the segment, that, of a amount. in [indiscernible] I run more you there affected put program off that just on What program was retention what program? one in was think to referenced I the the insurance guess Q I the

Richard R. Whitt

heavy not one it referred being not for was was in The and there business really program a it was we performing. and mentioned particular was a a well. handful It I performed Well, property that think put were programs of that of lines municipals into program. exposure had a runoff had that to that

away And so walk from we chose that. to

million the think impact I $XX was not the in million, if quarter I $XX mistaken. am

Jeremy A. Noble

that yet. in I I period the think a capacity. Not program for much of so transitions gross to sort serving of so we're end mean, time front

far influences the written gross it the we've retention premium. on So what net so seen versus

Richard R. Whitt

fronting this right. moment. carrier next the still for We're Jeremy's Yeah, at that

it retaining hasn't we're it net. point, growth at not this that but So much our impacted

So over time that will come through as well.

Thomas S. Gayner

that seeing kind we a classes focusing that the I the opportunities. up profitable find to that's by opportunity reduction of think for premium will And example good make where we're on

Jeff Schmitt

Right, okay. color. Thank you for the

Operator

go Markets. comes from Dwelle question Mark next RBC from Our ahead. Please Capital

Mark Dwelle

is property of Nephila, what I the couple guess is, or a curious in A going morning. in about just change questions, that reorganization Good particular to more premiums millions that's rate talk little detail I'm that about the that? business reinsurance in general and this effective many immediately effective terms or kind something like year-to-date about is for one-one, it as using year, in how impacted, of a maybe are of run

Jeremy A. Noble

is, us on business interested, effective offer It XXX clients funds. the XX of think, Nephila [ph] to renewed on funds, It's terms balance the very will go Nephila our obviously to in shows to easy premium clout Re. will Nephila invest were Mark. do market management much at market we a in AUM, cat funds. of billion business. Obviously, from is that with roughly renew It's to that extent be of will Nephila that that the it investors, about sheet that want balance whatever to those alignment obviously And forward calculate renewal that to sheet I its take investment never Markle's it's premium. we I'm it simple. with makes we Nephila the it Markel are Markle's then the as it no cleaner quotes within Markle's is books. for and to just extent And cat so allocating be volatility option, how million presence, math able of It's that within achieve sure, Sure, they if capital XXXX renewed, to have the it's does what risk, cat, driven to going XX removes

the making too terms of logic made in just move. that sense So, much

Mark Dwelle

seem the that topic, now of make Thanks that timeline a On did change or same generally of quite run you've there? does on the to accelerate topic sense. with finalizing that in same that in settlement any logic bit the or and achieved cat code off the for legal

Richard R. Whitt

settling the the the ceding. by is team run-off contracts the really cedes and progress No, the has settlement dictated of the made terrific with there

AUM think beginning of I X.X I about think billion or know, we're don't is, billion down down to year. X.X I the of the from so which

made great they've progress. So

last case, takes a that always bit the is while. know, you As

do is to really long the to take that assets return to it settlement unrelated to but how investors. will all So it they're working really hard

Mark Dwelle

showed that the various items COVID within Okay, and other those related helpful Were or I or just you took. charge. the provided Q release effectively table though, had, segments reclassifications takedown that was a the insurance you question reserves are charges actual a then a in reserves reinsurance and to few where between the some negative it of associated? There very that there related table of

Jeremy A. Noble

reserves Hey our pockets reduced we initial were few where Mark, it is expectation. There actually Jeremy. a from

case. of with haven't line our FCA associated between putting the U.S. expectations But business contrast we to international of commented relative Some to really our Also up relative our test relative reporting business to the about the claims sort UK of reserves. there. we the kind book in some frequency initial reserves some the property in that seen of interruption, we the for of in of reinsurance within initial our sort interruption our saw

those of situations increases. So reserves against were a where reduced netting there couple we

Richard R. Whitt

as reserves obviously this quarter the tried up my through comments. to learned continue I shot before. we'll kind get this mean, because and my we've never situation Mark, lot in back that in COVID. learn And first to of allude a we our for we guess then, coming we've more since Obviously, is took best seen I with to

as In result that a in we those is come that other guess reserves we As could some we go up. of needed areas, will felt continue reserves learn. adjust down. to areas, probably learnings we my the forward. go felt And We'll as to continue

Mark Dwelle

significant million, this the bucket event of this certainly for of been is total most $XXXish paid at of sort claims, have point that that pay or point? there has in relative the Of downs still IB&R some I think of to at would I

Thomas S. Gayner

half but is you're don't know I in I IB&R. still right of Mark, certainly that than more think there, if Yeah,

but claims been seen a a of reporting amount all and the the -- increased IB&R. that's we've we've of the third good significant certainly in put that So had that's And quarter, from IB&R. example sitting it's in principally encourage there's that activity, still have we've in settlement up some seen amounts standpoint

Mark Dwelle

Appreciate it. the all for answers. Understood. Thanks

Operator

John from ahead. Please go Fenimore next from Our Asset comes question Fox Management.

John Fox

morning, Good you. for Thank I'm curious everyone. is Richie, State National. expectation what your

would do start that new some coming again? mentioned expect You When you programs growing out.

Richard R. Whitt

quarter. we enough first And think that I programs know, the it. about talked You off came it were will. -- big Those in it's

of opportunistic program that upgrade needed no One they services program. programs ratings, much longer And an received of company capabilities. their running when their State was those very Nationals

is going to that do you go away. it if So

trying large away, was new so premium and we've up moving that been on those market And have the we'll how in really it's a like that interesting, those that Unfortunately, away much exciting from more programs as the that a none in players went importantly, the we're get is new market the to to programs time guess, on. But hopefully think new just, us, see There's of get went little premium right But a activity what's to to running all I we very not of carrier. went of to attractive away. happening I and surprising up other one now. quickly. seen as off new set way number conditions coming it ramp advantage, a two start of to services and going quite seeing. very the The take just a number it's themselves basis but the a it cut

So we're of receiving inquiries. lot a

John Fox

remixing goals you last your underwriting you're And and quote, Okay, but the probably the a met the have business. cat mentioned years great. due few losses you to that over not not

profit, So ratio, mixing when business you're you of like were I'm in a aspiring that? and premature what terms underwriting for higher share of can is combined about the assuming thinking or it you're what type you to

Richard R. Whitt

rate the environment XX You John, having and we contend we I that interest it's around the this rate no rate team with, environment. be But can't know, to lower. because to given on are Tom given are combined. the it to need Tom see returns the increases interest in something to think And got and to generate team pressure around I'd just the XX the to be we low seeing, love put

John Fox

Right.

profitability was the investment to the expenses I management Okay, extent this, you about side? but you. And lawsuit, of is can what of settlement understand so rate maybe some you can't that then the in thank there at talk a great, ILS run

Richard R. Whitt

Noble. from run the Mr. day, think to yet. and going rate talking not Mr. going Well, to exact Noble I've I'm quarter seen -- were and I an a other it's quote unfortunately, don't I be

You success had there's X. where we January of I John, we for noise, are, been AUM in have know, But attracting a unfortunately. think just lot here's new

will coming So board on that be XXXX. for

fees. rates So priced. up better impact make of be so substantially, the think going thus are our for brutal. of investors earn I Well, better four us that I number I years ability a we giving earn have can't know in that about have. although things business and to last return priced create is been are the better to ILS is tell opportunity that much forward, losses, going the the But going a on business amount do to we that how would to and our many losses AUM two -- you

business been riding hasn't quarter So, really some there increases I momentum, good really, we've in rate of in yet. But so funds. to invest signing terms both up the the receiving the we're think of going investors and XXXX rate were a and run into profitability got

Thomas S. Gayner

John, gets to tag of its that nuance one And in think and I because newness Markel. lost very, I to on works important the business could there's very if communication Richard's this often how answer,

for So dollar were capital. sheet, our This and up we when in business be when Richard have talked that in managing write. the our about capital other the losses that the a where show would that occur is ratio, would that loss old days, writing business would we balance we're people's combined the on dollar

fees. and profound effect performance So ratio a on management really the loss indirect has the but

business. haven't about seen a not in of run So there's at our years. many has of expect normal more capital where to to been over would we've management we kind and normally environment exponential returns industry have an the to a Richie's been would fees performance you of see losses couple the rate, last expectation normalized level describe what point come in on when earned and start Nephila lower we that your than indeed And years

John Fox

Okay, well this let -- question. me another prompts

So and be on in about and annualized Nephila that if asset one traditional is expense, do on fee XX% revenue management, if profit of terms familiar call take get value about think I and would XXX average. whichever that, I you about and my would average margins points revenue I the basis with, then investment margin

the it like losses which sounds but is third loss, So, amount there's of dimension, a also? cat

Thomas S. Gayner

Well, here's the thing.

you a management, X.X your And did equation. investment it, asset is well the profitability. have It's management investors. like there's that. not assets So company based only of your talking performance where been here. part variable highlighting managers fee shakalaka [ph]. just of expenses were there's performance aspect mutual how fees that times about and on traditional exactly minus the the there part that's historically them for In version that There's the your funds Then another you fees if math I'm out plenty of management that's manages of doing of under the

John Fox

Yeah, so it's two. three okay, dimensions, not

Thomas S. Gayner

Correct.

last performance So above been given previous John, fees of the above earned normal because been there activity. normal four or a lot years pretty hasn't obviously, there's cat

business add is very XX this management, At highly or need billion And cost assets leverageable. manage it. management, assets a also, to different substantially. We would because impacted scale lot there XX we billion look billion that's pretty it business don't under XX additional under of billion the So really that. XX to of of can is or under

John Fox

okay, thank That's good Right, clarification. you.

Operator

Our ahead. question Phil comes Deutsche go from Stefano Please next at Bank.

Philip Stefano

Yeah, thanks had you the for? for the a that reported that includes follow-up. assume Richie XX% ratio cats goal that but and combined about, talked on I the that's all number

Richard R. Whitt

I Yes, it given that we need to sort rate we Yeah, environment. level for. to get cats and has include to interest the but need of think,

Philip Stefano

years? today you And versus you where pricing of getting the how think of and couple do next about over dynamics stand the there

Richard R. Whitt

I that. You know, feel about bullish very

in with of first questions we think attritional. set the the underlying about improvement talked I the

very room for more working we've there's hard reduce from think losses. obviously to that I improve. volatility So, to And cat been

as XXXX. bullish we So, into go I'm

Philip Stefano

couple numbers the revenue to a some there's seasonality growth expect we ventures, about us can could Lansing as is the we frame the question into next or on one last you help maybe the the of over quarters have and business mid-XXXX? could Okay, that what think contribution

Richard R. Whitt

look when of down revenue given Yeah, wintertime. rate I you thoughts a seeing the products reasonable right bit in conditions, to kind not have. should that We're quarter, run seasonality little the that a Typically, current you think tend business at that's slow now. building

construction how owned warm we'll enough tends it weather. to tell it white pattern than we've would be long but any hot, see you give to Just other common related more are things you goes. seasonal cold than And housing that not sense weather

Philip Stefano

is at for something I Lansing the your in the fingertips quarter? didn't standalone see you number, have benefit that a

Richard R. Whitt

No.

Philip Stefano

you. thank right, All

Richard R. Whitt

Markel the thing. whole Nasdaq of Part Ventures, and

Operator

Charles from Our Gold next Truist go question Please ahead. comes [ph]. from

Unidentified Analyst

when and horrific this have many they're horrific by many the or Over was decades a I share conditions but not period. COVID, I've for. have repurchase companies the maintain Difficulty] whether you to bluer gentlemen. low, of good. than instead facing in [Technical price is plans they're you envisioning when when this but and they Hello, that during that my equity to a currently. company if decision, of yet value doing times fires going the seen a why storms you had not seems price it business, very to or Ventures lot blue that skies like get the are perfectly when skies was but by The now, I you're attuned pricing but high -- are know are not make the is well.

of seen not You I cash, the seen, arms. feel about billion of believe, to handcuffs that ratio you're that's insurance to in you've the your the wait the value correct, that you good market do the take not mean off quiver I've back history. you or in you arrow would $X.X have if the but the have told Why to all doesn't not trigger have that want today, so, company to buying statement and shares to quarter use never I year Why the open to you back the haven't to got last for may that may pull last it choose clear, ability it? you in to if have your the cloud

Thomas S. Gayner

that And to. Charles regulatory we question. my XX the is the Right. this Tom, is continue the rating sensitive agency need to be to long view, environment point really of thanks for the and in from poll

held. and the form capital the we to experiencing the in is in have amount which of rate and about be agencies has environment, insurance it regulators rating being which we growth continue the of what particular we're business our very in, So current

that to free will for insurance you the ongoing to slows and And of actually business. say. be that's the them them need where an down the we sensitive I we at up can. regulatory try agency everything to capital little possibly So comfortable make that sort with work capital But other growth the with agree than a we rate continue bit, as process. to that, point And rating to as

Unidentified Analyst

be things going Well, well? would buying since consider then see insiders so they heavy doing the other signal

Thomas S. Gayner

ear. mouth your God's to From

Unidentified Analyst

just me can give the Oh, I phone that. call do

Operator

Bob comes And question Please Boenning go our next from Scattergood. at & Farnam ahead.

Robert Farnam

Yeah, hi morning. there. Good

But you so, losses a you years over if the or more Ritchie reinsurance last one for maybe included the the cumulative Obviously, XX Just think segment. I last on to cat in question night, at suppose. the loss is I cat are going I and pretty seems looked had business of property me to lot Nephila for it that cat be the reducing ventures through segment. sizable. It volatility a that you by consolidating

that casualty going be how So has and XX% my more, more are and performed those it's combined specialty from pieces? question how if is away far like going to that ratio forward, looking

Richard R. Whitt

said, that sure it of we're seeing we've at flowed has And, not yet. as has But reinsurance that primary through the remember nice Bob, it got Yeah, right we're I and of was. side. to at level make whose all before the right is performed really it I Not going can't needed the profitability. we're what I've to as growing, on to, you, price, tell it increases question well rate

But I is at am our I going opportunity be profitability that we're is think on I think But little closely. -- to level. moment. the primary really a to So a behind reinsurance great -- to good back a to it bullish get watching

you'll keep are we're to so And us on once going comfortable, grow we working it. see and it

Robert Farnam

the take the performed way probably that of to we back you of other or out, is consider is, cat how looking at out catastrophe maybe I point are you so Obviously of COVID, think. casualty obviously it? reinsurance a into losses what pieces take my XXX alright specialty and that is a property so the that have Okay, kind that million so lot the cat,

Richard R. Whitt

but property policy. the coming mostly Not That's entirely, of mostly. out

Robert Farnam

good. alright, Okay,

rate taking going way forward? right think exposure, and So that cat the run is it cat a you and the remove lot about to the a the the of losses, maybe of sector premium out, give reinsurance

Richard R. Whitt

and combined you going tell math, the for X good that that would I years. what on has been And has is enough been XX ratio to probably you not do if Yes. softening market

primary the that's yet. last for there. I don't Growth that it's seen it profitability rate we're you until it's increasing yet. we And think track, but positive available. the years an -- growth the We not have and at haven't we is least want there absolutely on right So where is two why is

Robert Farnam

you. understood. Alright, Thank

Operator

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

Thomas S. Gayner

Thank us. you, very Thank you to support. joining next We look for well. you connecting your again with forward quarter. for much be Thank long-term you

Operator

concluded. attending This for you today’s has Thank conference call now presentation.

now may You disconnect.

Markel (MKL) 28 Oct 202020 Q3 Earnings call transcript