MKL - Earnings call transcript Q1 2022

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Operator

Good morning. And welcome to the Markel Corporation’s First Quarter 2022 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] During the call today, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. current unknown opinions risks. on of a based and known are assumptions concerning and variety They Actual contained by in may or results differ suggested such materially forward-looking from those statements.

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

find directly measures a in may GAAP these reconciliation recent most measures Form XX-Q. You and the most our for to GAAP comparable

in the Investors note XX-K being I Executive event to Please and recorded. For is XX-Q go this Co-Chief Gayner, Form over now Officer. the found conference Form Please turn www.markel.com ahead. like on Tom to would be section. Our at can our website

Tom Gayner

it Tom Andrea. Good Markel call. you, Thank today the I CFO, first Richie and Jeremy am you by Corporation our and morning. pleasure Noble. quarter conference Whitt; joined is indeed to welcome Co-CEO, to our Gayner is This my

forward objective financial your questions about some news share to our most to thoughtful the circumstances answer of and Markel questions. We recent As the look you company. our statements, always, always importantly, is more have and from any might your of

other that events In addition offered up two time as call, coming spend got this meaningful chances management. with to have we up have to

as we for attend heading to to Meeting Berkshire we the Hathaway decades. be weekend, Annual done will back this First, have Omaha

couple next Omaha the see to us, would XX if center chance in we hosting a.m. convention a take be investors of our to brunch you will annual hours Berkshire that can fellow at and the during long-term the absolutely We love day for time weekend. at love Marriott spend to questions We with join you. we and Sunday

will the be Union on and Wednesday, you meeting. spend Meeting upcoming at XXth, Virginia you Annual Markel at Raceway. the would we at all to attend p.m. chance Richmond invite May the annual our Second, at Arena Credit time with the We Concert welcome X LIVE! to

quarter, results performance with pleased financial and share of I you the very optimism. the of our accomplishment first to I hope am As our and sense

XX-day Insurance, The investments. of Markel first a Markel. quarter engines is of enjoyed short Ventures We and three view

last operations, can it In are experienced even as in put in is quarter. succeed, what surprises owner Markel all three of negative any While accurately shoes engines of but report Insurance that correct. all here if If should i.e., no is results returns first the engines provide of to our lovely your and our in be portfolio. in myself over operations we mark-to-market one I one when that the would thrust, designed firing. earned investment I positive Insurance expect say only quarter in three you our you Since ventures three There excellent swings XX an time. not days, That of the two dimension, we Markel that to is fired. our

world place tsunamis, wildfires, events can reported hurricanes, big loss observers earthquakes catastrophes, other know as the regularly events pandemics, not. like You, whether of took natural wars, news or major through or

thoughtful have from demonstrated Insurance you. that Ventures that how report supply for you all chain owners to in when suspect tensions, that Given together details you a those you might think pleased reasonably to change begin put incredibly and minute, of excellent but we perform. Similarly, many conditions, have Jeremy in of Insurance in the just and a Ventures through was able the to about anything should years give we are for be will trade our operations, their you and technological news, listed our the enjoyed pleased as inflation, varied results pandemic would of excellence don’t to our what am operations I as businesses issues, and we know ongoing I diversified I and sense set of surprise more have you profitability including give report XXXX. factors talking Markel operations awareness some numbers already Richard general and will minute. informed am I we Insurance. I in a meaningful growth I reporting robust

are experience investors our the we publicly portfolio investment while mark-to-market saw reported and others. as days to think to agree XX of first traded would as most compared declines regularly engine the our Finally, in I you with likely that stocks bonds, the volatility

more $X.X XX, XXX% an our it March stands an of time. had an five glance reality, engine it $XXX. and stands challenge to billion, share over longer of could each senior produced measure the imagine other On way how XXXX, for imagine. Five years $X.X March included XX We matter take XX%. than XXXX, years thought of of term last any even sold regularly XXXX, that that later, billion. increase On calculate $X March Those days. portfolio equity including of years be $X.X On each quick Five to quarter. just or given increase Five as years incentive share what it wildfires, investment pandemic, time the at an might opposed measurements billion, later, ones couldn’t five things our you of sold increments, portfolio unrealized at last for years equity XX, those roughly stood a management I gain at in any we at later, five-year Markel and increase helpful compensation XX%. about last over tsunamis the you XX, roughly the for billion. Given $X,XXX,

five-year business. from the generations we this senior about results, report a While first Markel manage I’d compensation financial to and run you rolling such over over like think necessarily as in results longer preamble, we quarter. we details management traded longer publicly the to provide reality, a as Financially, company, With our turn to we timeframes. quarterly even tie much and as in now and of Jeremy with to that things timeframes, as we decades think

Jeremy Noble

our and diversified everyone. from morning, Tom, benefits that architecture first weighing come somewhat of at Markel. markets Tom three-engine quarter our our Markel the results effects of rising the good and strong returns within operations. during interest Insurance operating the mitigated public highlights rates mentioned, you, and bond quarter XXXX while portfolio the on Thank equity our Volatility down within the Ventures were investment by

of to $X.X underwriting increase gross compared XX%. billion $X.X our were at first XXXX, an billion in premiums results, written Looking quarter of for the XXXX,

notable XX% coming premium period new Our general offerings from was Retention of and year. of favorable more premiums Reinsurance professional product the liability product X increased with both business point our growth across segments. volume written many lines, reflects which lines, our and gross down volume, is expanded rates in product liability last the most Insurance same XXXX, our and from

of million combined attributed conflict. the Our included of This in $XX.X reinstatement XXXX points a attributable year X compares for first points our combined losses XX% change same or a adverse which and $XX losses to arising adjustment ratio which estimate and losses the ratio million of Uri quarter $XX consolidated XX%, last an loss in period a $XX the was Winter development million ceded expenses Storm for to X ultimate X Russia-Ukraine COVID-XX premiums of of of year, million from included ago. to or point or net

prior an quarter improvement an on in XXXX on favorable year. for first was first expense on XX%, last Higher compared our loss segment a the loss to year combined compared XX% favorably to less prior consolidated accident quarter million a ratio. in of reflects development impact an loss impacts this from Insurance to XXXX million XXXX. year same offset by attritional the development, first regards of lower reserves ratio earned expense With premiums of partially these This Excluding ratio the favorable had quarter and prior both a $XX year, prior XXXX for lower year year’s the reserve in loss and years, ratio, of our our to $XX developed unfavorable by ratio loss loss compared within period our impact reserves.

favorable were investment Turning value movements. and attributable $XXX million XXXX, market equity in of investment comparison market gains portfolio, by driven an to to investment to a were results. of fair by million in value of $XXX XXXX net the primarily decrease quarter the losses first equity unfavorable This movements. first value quarter driven attributable in portfolio of in our of our the increase our Net fair value the

impact longer over income, to first have million of mentioned investment $XX gains and same last variability reported our and and decrease million year. net we measure returns the typically a our investment of as was given I same XXXX, in focus, on compared the to to maturities prior the With the investment time. of average timing the on the is in period compared XXXX this offset investment ago. fixed XXXX, method XXXX impact investments equity Net the quarter in higher to notably, most by holdings of year in losses of lower in our investment recognized year, fixed first reflects in of calls, long-term The in expected, be this period losses consistent As largely regards of we income quarter Hagerty. was maturities yields quarter $XX periods with

purposes, we are deemed the significant have fair to in influence our and, under rather than the Hagerty accounting As exercise a investment therefore, to a for over method for account reminder, ability Hagerty, value. equity

$XXX was sheet. included carrying March was assets XXXX, value in consolidated As investment the the which of in million, of XX, Hagerty other our balance on

quarter based approximately value Net Hagerty’s As Class the portfolio, our $XXX from million. interest in estimated of in gains of taxes of million common value quarter. year, of of fixed increases stock reflecting net first the A maturity first decreased XX, investment shares XXXX, the the on rates was during a price during of the investment closing fair unrealized this our $XXX decline March resulting

of to hold we mature. a As reminder, maturities they substantially fixed until our all tend

of same was of many increase Ventures across as The of of quarter revenues Markel to revenues $XXX XXXX, contribution period XXXX growth from last to $XX contribution businesses. Construction businesses, well million EBITDA comparable quarter well Metromont and Services million million increased during our at Market cover quarter first last from acquisition of This organic Now, of increase in Consulting results acquisition and Metromont. December results I for as will Ventures for XXXX, $XX from the first compared other our reflects Services to segment. in a the Revenues XXXX operating our $XXX compared Ventures of and higher strong Buckner, as the XX% August the reflects million year. our Markel the improved as the year.

disposition pretax portion a As of in of a included sale gain reminder, EBITDA of the our of first quarter the of a with $XX in one businesses. million XXXX connection healthcare

again, loss the small shareholders $XXX to loss at first for results effective rate public year which in $XXX XX%, and consolidated million quarter net to quarter shareholders quarter the to was and shareholders to equity comprehensive Guidance a by was our first tax first of XX% the our attributed million, valuation. loss estimated swing both driven period XXXX. during shareholders the We the in both compared of results our XXXX of first ago, fixed ago, $XX the pretax in quarter, the tax a period. annual first in maturity Looking quarter common to of The valuations. public in a rate income equity to changes $XXX common having reported of portfolio million of income the share the for net quarter for largely XXXX, relatively XXXX to of to a year compared effective of same was common year-over-year million

flows, highlight balance few our make will a sheet. the cash comments capital on period in I transactions Finally, and few and a

investments terms Markel funds’ in March transaction the we Funds. return investors all we the previously of to transaction, remaining substantially provided year, capital is us being which returned of purchase this in the announced CATCo, completed as related the funding Re, of million to Under of time CATCo Markel trapped anticipate buyout collateral the all of Markel accelerating at CATCo trust to to First, released. in fund we present remaining cash $XX Markel in capital

investments for litigation, to We releases pending businesses of the all of payments made funds net million Insurance including which investors’ during recognized transaction, of in additional benefit to proceeds the the exchange quarter related was in claims or first $XXX also of for the CATCo and expense XXXX. an as investors the in any

effect minimal the future results. We have will remaining of CATCo expect on that runoff our

were million, there our the of interest resulted sold Agent February in our Velocity operations, consideration $XXX transactions our touching of General total Managing within we Second, cash ILS two $XXX a in XXXX, Nephila worth gain operations for upon. controlling In million. which majority

a agreement after XXXX, have Velocity definitive source we risk to interest continue to In March approvals Velocity in origination We and and later of controlling transaction this sell Nephila third Agent General closing continue a is our be for in entered Volante subject customary and to operations. to our This minority the to the a is close expected quarter our into interest sale Managing fund regulatory year will management in conditions. operations.

disposition Nephila solely ILS operations management operations. core our fund comprised of the of Nephila-Volante be Following operations, its will

flows first in the year. Net quarter flows flows. quarter Turning million to compared in operating the March, stood the of at cash at $XXX the the $XXX shareholders’ last cash underwriting first of the million to for end billion of our reflected was growth first of the at for volume. to by $XX.X operations XXXX, cash equity end quarter of XXXX strong Operating cash given year. Total $XX.X from billion provided premium compared activities

we that, to talk Insurance in committed I We quarter. continue to to value time. During about believe under outstanding over results stock All-in-all, Richie our and Markel turn With with building our repurchased to the XX,XXX year, with we it the advance shares effort start operations. more remain particularly this Ventures program. pleased of repurchase We strong will Insurance are the businesses. the over quarter, the our shareholder to first our in we share

Richie Whitt

Jeremy, good up the the discussed year. remains to we first of that throughout but hold it’s start everyone. trends growth the XX engine’s our organic quarter. strong. well first and discuss quarter continues off year you a we Insurance results. to am into to only Thanks, I today environment excited with Obviously, the and strong pricing to morning, The continued last days Many year, are in

robust, combined despite said, operations, premium that Jeremy that gross billion our an from production period be of XX% losses ratio and we XX% in XX% growth program with first X As conflict. for operations. underwriting time that’s with done Russia-Ukraine $X.X achieved the and the Business quarter surpassing growth points we our within the to for services written the continues have

professional growth liability particular in we most are While pricing of also to we product and continue benefit seeing general favorable products. new business our from a environment, lines, across within our

close later the Velocity of an to active quarter As the the from devote the significant XXXX in operations Jeremy our arena had Volante acquisition and which space, majority cat mentioned, value unlock now. in allowed sale expect completing we of ILS also opportunities to MGA sale MGA right interest year. our time we Nephila Both these operations, in in also and Nephila this the transactions of announcing the they attention some full see our to

and and national Nephila Insurance-linked Now operations, state operations. include quarter which underwriting will services our I program engine, our securities discuss Insurance results first our within operations,

international identified Gross domestic Insurance operations, from double-digit just were period. while the segment across Insurance billion general our have premiums liability all earned with in the We product in benefited XX% in under product rates were new premium quarter, our and So up will in we major in where the kick XX% and particular with growth program it written $X opportunities lines, both ridings, professional segment. business up and I liability new the for opportunities. off have premiums lines, saw of within the

to included compared for in combined to Insurance although XX% of our quarter the segment environment rating We was moderate. from last ratio versus related to or product Uri. favorable achieved net continue lines, current million combined related losses rate increases X within net losses ratio of Insurance XX%, continue year. to point The million points the gradually $XX benefit to most the of Russia-Ukraine year X conflict Winter The $XX year Storm or last

product write premium over ratio lines, and decrease ratio Excluding a across several X our reflecting from by loss the decreased the from accident combined loss quarter. was preferred ability in decrease an by attritional have in events, unfavorable rates classes. just a losses ratio due Higher year’s favorable on prior development prior our to to the impact and partially impact these from a ratio. premiums more impact on accident our offset favorable the point in earned our in our expense This rising impact product X-point year’s

both, Reinsurance while for next premiums segment Reinsurance were the in driven liability premium I the from Gross lines, written business to by growth from with and So and X% our higher our within will rates, the liability the quarter, professional talk earned and credit compensation higher general up offset within were was premium by XX%. new our This premiums Premium was along liability about liability up favorable general in growth and product impact partially professional property adjustments in lines. premiums favorable surety, lower part renewals, lines. due more and segment. workers’

Our our our property transition within Nephila retro continue the underwriting business operations. of writing lines Reinsurance with to discontinue exit and the strategy off property part our to as of lines run to property decision

As end off was of a we due this losses Reinsurance of or from combined Uri. last fully combined impacted share points large Last adverse Storm treaty. first X Russia-Ukraine of to related worker’s conflict, $XX to million XX%, net development The quota The to year compared by segment ago. XX million losses ratio in Winter the of within points COVID-XX. property, or year, the XXX% also the reduction from The million to risk compared of the year are the quarter, the current of $XX was the compensation $XX included segment losses related year one ratio of Reinsurance non-renewal for at point. in terms was period to

events, points adverse combined attritional from segment liability discontinued impact X the part decreased lines. partially favorable loss to prior since within Reinsurance adjustments, development by accident decreases loss years’ prior due lines. general and the property year development year of carried the entirely this year offset from slightly loss a general ratio by modest loss favorable in quarter, loss to partially liability premium a due these attritional Excluding lines -- increased driven attritional in adverse had development adverse current year ratio, our our segment this ratio. loss losses, by The accident higher mix business by accident impact on ratio offset lower offset ratio product current lower The attritional had our in property

will on and I our touch both of ILS which Next, other operations. part as and program our fronting operations services other of are operations, reported

of So gross all fronting program is the premium as from our ceded. reminder, almost and written other a services operations

strong Our continue during in operations the services with $XX million program of performance continued margins. producing total $XXX operations program period with million other fronting and from and profit services premiums funding revenues strong their

of by February. Our that at operations last ILS going the operations consist of lower revenues to to Nephila were offset revenues year entirely forward. sale at our with unit MGA the flat Operating in Velocity Volante operations, operations due revenues MGA higher

March to during operations answer were obviously assets happy within Velocity Nephila revenues continue up to obviously will Nephila’s significant commission be in I billion the longer as no XXXX. While management of with partner Nephila’s Q&A. a any few XX, with questions results. the conditions comments in finish and support under MGA’s management fund produce included premiums post-sale, market funds, about $X.X will will and of

or and increases, my would in be held and moderate, increases underwriting continue growth the Rates interest we better have year and cost. financial predicted discussion continue claims in that to around in remained played believe volatility, in largely discussed gradually and well on ago. organic to solid. the earlier including trends both we discipline continues a Rate economic social, said continued have inflation, conflict, I I but line has market its market. two than held Russian-Ukraine impact with recession uncertainty industry end. all up the up some in comments, role have concerns around rate supporting inflation There As have much at quarter what

into would rate and are remain believe you expect, ahead baking I inflation inflation. both of think, reserving our we and more pricing As claims claims increases

the we of we you, We quarter at needed great underwriting the of and and very the turn your will rest the quarter the got each we our however, with first first over be end now of to for considering right year. to at to we pricing I Even adjust the watching as XXX tell and will time of Tom. better Uri. closely, feels excited we will for in where are at XXXX maintain want XXXX in really opportunities with to Thanks things Bottomline, over and profitability. stood are the about Storm the Winter COVID-XX strategies where end that first the quarter be today specialty and lines I of end

Tom Gayner

human dedication Thank the demonstrate show grateful shared financial results. and creativity. themselves you, to challenging how be Markel Markel our that to people The continue to Today’s our amazed. environment of manifest continue remains finding current make their inspiring. and continue in people Ventures The and and managers and results Jeremy I to but supplies, to to in -- resilience find their as up speaks to continues values Richie. numbers volumes month-after-month, me the to absolute quarter-after-quarter their of colleagues Their their to customers year-after-year.

On continue statement. a Ventures, prices see we the acquisition to front to and adding elevated as Markel new general businesses

I such, to not Ventures would this expect to a new year. platform Markel add As

years. last I came quarter Despite years. several attractive we each that, felt several businesses during first added the in reference, For of the last and same wonderful the thing up the situations of

see will how We develops. XXXX

time. credit as a businesses the opportunities and level and our operations, entirely portfolio cash, of that the of and income to to managers continue and due There of to some in perform diversification well, were interest losses portfolio the existing rates. our also fruitful resilience was our In Also, provide Markel value Ventures change the Our consequence. investment in fortunately, and generate the the to in businesses continue overall no would Markel. to fixed increase existing of pursue our running add array to expect multiyear increases securities a continue cash continues record maturities flows that yield and our We from to to in fixed upcoming recurring current in investment and rates and quarters. fixed tend unrealized our generally of to results gains or income. to in hold pristine maturity of conservative losses, should shareholders revert Reinvestment at first income on income equities equity increase in at ratio In publicly-traded the of to our all quarter. portfolio, ratio. a the zero back fullness equity the XX% end I stood developments businesses That’s our grow, CEOs

Given recurring buy repurchase our profitability, income and ventures own position, prices, purchase Insurance continuing capital investment stocks are attractive durability and profitability, of we common to our stock.

Insurance also fellow are shareholders great well. for goal. acquisitions to in wonderful like win, fellow attractive for same our commitment your ventures the I’d serving and our worlds. world’s We able returns win, one creates without companies believe and our build to ready, who that the as thank of Markel. We win ongoing long-term or have to our can’t willing consider again We you owners employees of customers architecture the

We you for so kind with floor you questions. seeing you at open events our look are results as to quarter Andrea, that, the first we forward if to would you and to shortly. to upcoming update following one With delighted of these be connect

Operator

go Jeff ahead. William [Operator question Instructions] will And Blair. of our from Schmitt Please come first

Jeff Schmitt

is isolate, know detail how Hi. sort related inflation I social Good sort they running is CPI can And now? loss on that inflation? loss CPI additive had tough you you cost, or could inflation trends to see maybe social just do everyone. versus then curious, are but that how over the about morning, any inflation much you of taken the of be to running environment, on components, And what provide loss talk Could at? costs

Richie Whitt

I Richie. Tom is shot if will this in. a take or Jeremy will see I to Jeff, add and want

up our terms recognizing really yet. I to at start you seeing think seeing showing this numbers When not claims with data you in our got claims folks, much point. lot not of are we whole inflation the are a they of that in to talk

think know precise that we out We all going years. toward inflation, of claims reform inflation that both However, things the on erosion environment, the in you and than higher and running with finance, can’t earlier, obviously, know I over as are said the give seen. litigation, I look the in tort it’s different CPI each we historically it of more order But of have the is than different of believe, business. do at I be you increases still rate lines what those the I when would But that achieving, are high-single we a is terms inflation in versus are what increases. on a number, still the right now. rate at digits lines it of of still running margin we there’s believe we has. business on claims I that in write, so XXX historically

Jeff Schmitt

it. Got Got it.

terms obviously, it’s it rate some staying that indication They rates more got understand is to in up you start But holding call interest pressures, whether are rational? guess Okay. and the disciplined well. are are cost XX-plus increases, increase. And percent really aggressive then, you to are it’s tough, get people environment, still see on any you are or on some starting up. are low. on I seeing it’s surprised the been competitive conditions, [ph] cumulative I that of this holding rate after price, competitors surprised, pretty you three price, years

Richie Whitt

I say decelerated. seeing would is has competition it staying more of we are But, rational. rate yes, as the mean, clearly, pretty increase I

cases new adequacy entrants, assessment appetite rate some I years of MGA, of company three the years rate had I So some people’s changes. four and increases, margin. the they and in impact of after think, I do so both on their changes have some and think think,

So this market -- the cycle is than no cycles. past different

of rates, you my I gradually think, the said than coming it’s have it developing, gradually a is of cycle. war, I name the this and past I some that been in have I predicted interest ago probably But off are it. would probably quarters things peak We few the and inflation, think more very comments,

ago. that that think rates as something and very might on so enough maybe out have glide there faster predicted the a gentle to things give I quarters a I opposed gradual there’s people few pause it’s been

Jeff Schmitt

If they They philosophy could the helpful. one your income you are just as just wonder I I securities, could to all That’s -- it. held if discuss one Got sale. there. on available last fixed are

just You maturity anyway, to what switch strategy not the rising have can are I though. hold any in or that your mark-to-market you mean, changes saying hold to environment. there’s wondering this am those thoughts rate -- if any the on maturity interest that? and I are you changes contemplating with

Tom Gayner

Abraham The dog many a legs said, leg? call Lincoln the answer does you like if it’s a Well, once is tail how have four.

whether make accounting or leg, whichever there. economic value So about it the for leg you think sale maturity, are a a in calling the held a terms out real things number real economic available the mark-to-market use, We terms. one that’s doesn’t is tail to

have So expect in way really the we the that any don’t we doing label or accounting. changes what we are to

there’s another pay business. what five income out fixed remember buy fixed have important expenses the claims between of of sort income duration that’s because expect years of very is, four fixed accounting expect reserves we against is that and in the And match the of Now on that pay and to we that. what that out income buy reason securities duration over. running to the a philosophy to nuance is we The to of we the claims years matches

you portfolio, in the the offsetting you and and income rise the see really mark-to-market present reserves. net rates would you fixed an in interest of when doing reserves, amount a value reduction the decrease of So see equal were the if

Now value. discount reserves to our as we net their matter, don’t present an accounting

that we idea and are one matching saying interest So is what what are predict to is fully accurately going to we the rates have of doing straight are and do. way up economically either hedging things we no because how that we believe

So matched. they down, are up hedged, we way, go go are whether or we they either whether

a positive between making are keep We return positive on that as to things and cost spread portfolio yields of a profitability, time. good that of and number, the bond negative get over up spread the through flow add long underwriting we as we the

Jeff Schmitt

the for That’s very helpful. Thanks answers.

Richie Whitt

Thank you.

Operator

comes Mark ahead. Please question next go from of Truist. The Hughes

Mark Hughes

Thank you. morning. Yeah. Good

Tom Gayner

morning, Good Mark.

Mark Hughes

that implications low your favorable the future signaling on in underwriting XQ? much important on couldn’t how thoughts losses, something quarter, it about but And versus were we How to losses a of more other backdrop, backdrop is than cat us? the in think pretty cat just much the Russia-Ukraine, lower. kind -- when cat trajectory much is any The get

Richie Whitt

of first terms Mark, It excluding Russia-Ukraine. relatively light in was a quarter cat,

would I fact mean, last it say where think, combination. light derisking we in I a have it’s But the up would the terms I exposed cat in cat relatively been I that first showing is we say, of was over also, so, business. quarter And a years. terms it several of write

that a X or so, losses would fact the last the XXXX, both, it’s to that light have and cat And quarter budget losses points of of probably cat around diligently whereas been the a two, Jeremy? or so So, portfolio. in Is X%. budgeted have combination think, cat we our year for reduce first we right, is exposure I working in relatively

that’s So, that.

Jeremy Noble

significant events… And named Jeremy. just call to it’s out typically large, I’d like Mark, other We one only add point.

Richie Whitt

Yes.

Jeremy Noble

within our cat. …

sort that that of when all get are of sort they smaller to tend of don’t disclose activity and we cat amounts. So

there’s as then little losses But underlying down our almost embed We we bit average if our modeled volatility in Richie’s have in addressed years, you always sort in with recent to attritional book So the results. like associated catastrophes. significantly cat. of annual come reducing point, will, of, have a our

Mark Hughes

That’s benefits leverage? just that is helpful. any one-time in or ratio, then the on Thank expense efficiency quarter And you. and the

Jeremy Noble

we that It’s and to Yeah. and same and to the Jeremy sort It’s of growth more significant on rate. see topline -- efficiency are continue on at direct growth more base it’s leverage, right? -- the expenses grow again. enjoy able We the controllable not

to benefit that continue that, we in way. So

nothing significant would that, really out. call besides So I

Mark Hughes

No. Yeah.

latest this, the around you your market. have of kind comp on touched thoughts I workers’ but think

a book. I renewed think, You Reinsurance in are the Reinsurance? and primary that at the both How treaty, you looking on business

Jeremy Noble

-- of rates Yeah. That’s the resisted part to to that hardening drift is X% market has have that continued the gently yeah, and down, the one market X%.

looking the smaller of away. years, we up When As there, we so Reinsurance there’s primary stacked side stepped to didn’t decreases happened margin continue cumulative we we in think still and in and to but business a so comp result, we deal recognize mean, last margin now. believe that that workers’ the the got and have over we rate it the right the is at that with write business I few

Mark Hughes

you to When you you before? or that relative are you relative -- year what in categories lines talking margin saying your to are smaller, thinking about are other comp say the are preferred you is writing written the have you might year last or

Jeremy Noble

have a which line in of pricing people helps just terms several business been There something comp results Right. in comp, enjoyed changes the I of -- great results. we why last years explain years, Workers’ kinds the the few in have we now, in the has have years, the for workers’ have it. dynamic. next years. of Relative that But unless few last over competitive been several expect over wouldn’t workers’ to good been comp had

Mark Hughes

Thank you.

Operator

[Operator come Instructions] ahead. Mark from go next of RBC. And will question our Dwelle Please

Mark Dwelle

few A Yeah. questions. Good morning.

First terms the quarter expected Is way that what by I obviously, the adjustment track shares of how stock Hagerty for for so in that maybe in you both understand, that like, be that a dollar accounting. to number? terms, I there would mark-to-market, there equity different But percentage and Hagerty guess, for, had knew on was Jeremy, help mean, the performance the us investment adjusted than declined I can some I you the price amount and was. in that? kind

our of or arms get a So is we it? around that kind way about that can think there

Jeremy Noble

Richie Sure. shares, ownership be traded take well. XX% fair or in based the on I stab Tom the Mark, that approximation value in think you to as of to what regards where Jeremy. the can With we might A Hagerty. Markel and can about having at a it’s will provide rough join

in time. their And capitalization That’s terms so a of just at of value certain think in fair that bit point sort market proxy. that of of little a

what’s of obviously that, underlying to on Hagerty in do however, have to and company. transactions. a us any books, information it’s have top. proportionate our period-over-period. a sort don’t capital share We It’s record taking other the publicly earnings on As traded a far significant function not Hagerty’s our We of of because is access recorded more as quarter lag,

relationship in. the fair that about little figures how to bit between of on sort that of proxy and think we two that So, value a just of report the put that we thinking

Tom Gayner

worth probably they talking how warrants impact. about It’s and the

Jeremy Noble

Sure. Yeah.

of sheet on the we one that balance a of with bit So other create volatility underlying things hold and held actual to assets. the will little regards what to our Markel

see has volatility warrants. Hagerty We their relative little mark-to-market of the relative that to will a to bit

the reduction versus of the as activity stock you of an sort part warrant through the have expense XX/XX. would and reflected the seen of we think of if end year So in Hagerty XX/XX liability move that because the price creates at the that of a it we

more So that creates bit little a volatility.

of a also that’s of the have event. results in with kind year-end a would As going But public. either they a really more associated had transaction one-off, one-time costs

Mark Dwelle

that that… thing primary earnings the there results. up movement not stock So their really in the are It’s picking is we the price

Jeremy Noble

Yeah. of any the it’s proportionate -- function underlying of movement hold their value just our transactions. of their in balance a -- and is What share not we yeah. other the But earnings underlying sheet the What fair stock. on capital their

Mark Dwelle

very That’s Got helpful. it.

think for -- length you so already maybe is Jeremy. matching or of duration is kind about the talked one now, of about money Could of provide yield what right in investment this maybe forth. to Tom a and you and you your just duration yields provide you and just statistics Could question, are relative terms kind of general is at how new Second couple that? what where portfolio the portfolio book

Tom Gayner

a bit the don’t and have something be but a higher my precise little yields The duration that. four numbers I rates Yeah. are. the are a would at existing third, it -- fingertips, what money roughly like four and quarter would new than

the new the So months point are investment investing are are the rates the with at rates yield. over of last new gone of up, money we we embedded couple than higher having when that money,

Mark Dwelle

make couple the here. strategically Okay. sold Velocity why And Could be -- then they Yeah. have question money. I other That’s the had. mean, seem to it’s and them? to the last a lot capital those don’t they fine. associated out just They really and Volante I talk better of with them Obviously, as quarters you about over to you compared of retaining of have

guess, I moment? would to realize not cash a bit So, be the why them flow as question little at of keep the compared

Tom Gayner

Mark, as that quite the investments, both acquired Nephila organizations part had made those operations. were honestly, of acquisition those in Nephila Sure. two obviously and well, of were they

both management In had We have had ownership looked of partial ownership, at businesses. ways. it cases, two those

Nephila an management sort value in had the the been put that of so through cases. that realizing organizations interest those in with memorialized point. at And they some deals had of together And both

for arena cap opportunity of significant. Obviously, for Corporation. is fully be of the the those to cat fund wanted and operations but risk operations to now we is, is those great which to realize devote there the of management And management we now unlock significant to business, right in that core time the people, is value we So were able allowed in honestly, spent we and that bit quite created to businesses, them managing Markel fair they think value the part of Nephila two risk and that the can terms and had a there. great climate

getting of business just all it, really things our those the is but so driver. into And core on probably play focused super

Mark Dwelle

That’s then, And Okay. I helpful. question, last one if may.

just it expect of of is most been the this -- iceberg to Russia I you more impacted you In like of there be disclosure of and just had iceberg? get impacted about probably could is do mean, could Q. much of or be and to mean, -- that the in how of reasonably of much have sense broad a exposure accounts trying you how I already whole you the terms in or Ukraine on would transactions arise you fairly good how am will the that I the tip considerable have terms many terms. the exposures, or talk it of that in But

Tom Gayner

what and point To so send to see the -- ground. be little of coming able information adjusters is very is war conflict. the at you have still the not just status we in as very all Obviously, this out blunt, know, ongoing, we it’s on like are and Mark, the

get of standpoint, limits, be goes, you very or was we felt tell So really well up, good a IBNR But, our in get obviously, Ukraine timing worse. book damages how obviously what humanitarian it material what But policy that what this respects overall don’t we things just like we that issue worse to could the of a some exposure. up economic a put to situation. of something what happen, about you humanitarian on, matter, longer estimate and worked. situation, have it sort business. be big again, start standpoint you point of when and to thinking up is retentions adding Trying economic could much we estimate to make best write But in our Russia to for numbers. in would do our net believe longer Corporation. the potentially as gets it can a could really not the tried as faith Markel it we it at from both and our is an But, business from a I Reinsurance XXX% that put goes

Mark Dwelle

all Thanks. questions. That’s helpful. That’s my Understood.

Operator

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

Tom Gayner

being you well. Be Omaha much. Thank We or very see with you. We hope you soon. enjoyed to either in Richmond

Operator

today’s attending disconnect. presentation for you Thank you concluded. now now is conference may and The

Markel (MKL) 27 Apr 222022 Q1 Earnings call transcript