•Safe Harbor and Cautionary Statement
Insurance - Our principal business markets and underwrites specialty insurance products using multiple platforms that enable us to best match risk and capital.
Markel Ventures - Through our Markel Ventures operations, we own controlling interests in a diverse portfolio of businesses that operate outside of the specialty insurance marketplace.
Our insurance engine is comprised of the following types of operations:
•Underwriting - Our underwriting operations are comprised of our risk-bearing insurance and reinsurance operations.
The following table presents the components of net income (loss) to shareholders, net income (loss) to common shareholders and comprehensive income (loss) to shareholders.
Comprehensive income (loss) to shareholders $ (1,281,449) $ 849,654 $ (1,810,476) $ 1,208,651
(1) Net investment income and net investment gains (losses), if any, attributable to Markel Ventures are included in segment profit for Markel Ventures. All other net investment income and net investment gains (losses) are included in Investing segment profit (loss).
(2) Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures.
(2) Amounts may not reconcile due to rounding.
The following table summarizes the losses and loss adjustment expenses and related reinstatement premiums attributed to the Russia-Ukraine conflict.
(1) Amounts may not reconcile due to rounding.
The decrease in the current accident year loss ratio for the quarter ended June 30, 2022 compared to the same period of 2021 was primarily attributable to lower attritional loss ratios within our professional liability and general liability product lines, primarily due to the benefit of achieving higher premium rates.
The decrease in the Insurance segment's expense ratio for the quarter ended June 30, 2022 compared to the same period of 2021 was primarily due to the favorable impact of higher earned premiums.
The decrease in the Insurance segment's expense ratio for the six months ended June 30, 2022 compared to the same period of 2021 was primarily due to the favorable impact of higher earned premiums.
The increase in earned premiums for the six months ended June 30, 2022 was primarily attributable to changes in gross premium volume, as previously discussed.
The following table summarizes our investment performance.
(2) Investment yield reflects net investment income as a percentage of monthly average invested assets at amortized cost.
Net investment gains (losses) and change in net unrealized investment gains (losses) on available-for-sale securities
(1) Investment yield reflects net investment income as a percentage of monthly average invested assets at amortized cost.
(2) Adjustment to tax-exempt interest and dividend income to reflect a taxable equivalent basis.
(3) Adjustment to reflect the impact of time-weighting the inputs to the calculation of taxable equivalent total investment return.
The following table summarizes the operating revenues, operating income, EBITDA and net income to shareholders from our Markel Ventures segment.
The following tables present the components of operating revenues and operating expenses that are not included in a reportable segment.
(1) Other includes the results of our run-off Lodgepine and Markel CATCo investment management operations for both periods presented.
(2) Amortization of intangible assets attributable to our underwriting operations is not allocated between the Insurance and Reinsurance segments.
(1) Other includes the results of our run-off Lodgepine and Markel CATCo investment management operations for both periods presented.
(2) Amortization of intangible assets attributable to our underwriting operations is not allocated between the Insurance and Reinsurance segments.
Program Services and Other Fronting
Interest Expense and Income Taxes
The effective tax rate was 22% and 21% for the six months ended June 30, 2022 and 2021, respectively.
Comprehensive income (loss) to shareholders $ (1,281,449) $ 849,654 $ (1,810,476) $ 1,208,651
Readers are urged to review our 2021 Annual Report on Form 10-K for a more complete description of our critical accounting estimates.
•our efforts to develop new products, expand in targeted markets or improve business processes and workflows may not be successful and may increase or create new risks (e.g., insufficient demand, change to risk exposures, distribution channel conflicts, execution risk, increased expenditures);
•we offer insurance and reinsurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses;
•adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves;
•changes in the availability, costs, quality and providers of reinsurance coverage, which may impact our ability to write or continue to write certain lines of business or to mitigate the volatility of losses on our results of operations and financial condition;
•after the commutation of ceded reinsurance contracts, any subsequent adverse development in the re-assumed loss reserves will result in a charge to earnings;
•regulatory actions can impede our ability to charge adequate rates and efficiently allocate capital;
•economic conditions may adversely affect our access to capital and credit markets;
•the significant volatility, uncertainty and disruption caused by health epidemics and pandemics, including the COVID-19 pandemic and its variants, as well as governmental, legislative, judicial or regulatory actions or developments in response thereto;
•third-party providers may perform poorly, breach their obligations to us or expose us to enhanced risks;
•our acquisitions may increase our operational and internal control risks for a period of time;
•we may not realize the contemplated benefits, including cost savings and synergies, of our acquisitions;
•any determination requiring the write-off of a significant portion of our goodwill and intangible assets;
•the failure or inadequacy of any methods we employ to manage our loss exposures;
•the loss of services of any executive officer or other key personnel could adversely impact one or more of our operations;
•the manner in which we manage our global operations through a network of business entities could result in inconsistent management, governance and oversight practices and make it difficult for us to implement strategic decisions and coordinate procedures;
•our ability to obtain additional capital for our operations on terms favorable to us;
•our ability to maintain or raise third-party capital for existing or new investment vehicles and risks related to our management of third-party capital;
•the effectiveness of our procedures for compliance with existing and future guidelines, policies and legal and regulatory standards, rules, laws and regulations;
•regulatory changes, or challenges by regulators, regarding the use of certain issuing carrier or fronting arrangements;
•our dependence on a limited number of brokers for a large portion of our revenues and third-party capital;
•losses from litigation and regulatory investigations and actions;
Results from our underwriting, investing, Markel Ventures and other operations have been and will continue to be potentially materially affected by these factors.
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Markel reports 2022 second quarter and six-months results
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