Markel expands in reinsurance as group combined ratio strengthens in 2021

Markel Corporation reported a 10% increase in gross written premiums of reinsurance (GWP) in 2021 to approximately $1.3 billion, as improved underwriting performance of the company’s insurance business helped the improvement in the combined ratio at group level by 8 percentage points to 90%.

Along with strong GWP growth, Markel’s reinsurance division saw a 17% increase in net premiums written (NWP) to $1.2 billion and a 12% increase in earned premiums to over $1 billion. dollars.

Markel attributes the premium growth to new business and increases during renewals in its professional liability and general liability product lines. The increase in renewals, the company explains, was mainly due to increased exposures resulting from the growth of the underlying portfolios and more favorable pricing.

As the reinsurance portfolio expanded in 2021, the segment suffered an underwriting loss of $55 million, compared to an underwriting loss of $34 million in 2020. The reinsurance combined ratio totaled 105.3% in 2021, composed of a loss ratio of 73.9% and an expense of 31.4%. report. By comparison, the reinsurance combined ratio reached 103.7% in 2020 and consisted of a loss ratio of 69.8% and an expense ratio of 33.9%.

The reinsurance business was impacted by catastrophic events during the year, current accident year losses and claims adjustment expenses in 2021 comprising $100.3 million of net losses and claims adjustment expenses attributed to events in 2021. However, this was somewhat offset by $210.7 million favorable re-enactment bonuses in 2021 attributed to these events.

Markel says catastrophe losses and reinstatement premiums in 2021 were primarily attributed to its retrocessional reinsurance business, part of which was ceded to Lodgepine Re as of July 1, 2021and its property reinsurance product lines, which Markel stopped buying on a risk-taking basis.

In addition, the combined ratio of the reinsurance sector included $190.9 million unfavorable development on prior accident year claims reserves.

Markel’s primary insurance business more than offset unprofitable reinsurance underwriting experience in 2021, which saw a 312% increase in underwriting profit to over $696 million from $169 million in 2020.

In this part of the business, GWP jumped 20% year-on-year to $7.3 billion, NWP jumped 21% to nearly $6 billion and premiums earned 17% to $5.5 billion. of dollars.

“The increase in gross premium volume in our Insurance segment in 2021 was driven by growth across all of our product lines, particularly in our professional liability and general liability product lines,” Markel said.

The sharply improving technical result produced an insurance industry combined ratio of 87.3% in 2021, an improvement of 9.1 percentage points compared to the previous year. In 2021, the combined ratio included a loss ratio of 51.3% and an expense ratio of 35.9%, compared to a loss ratio of 60.1% and an expense ratio of 36.3% in 2020.

The losses of the current accident year of the insurance branch and the expenses of claims in 2021 included $940.7 million net losses and claims expenses related to cat 2021 events. In addition, the unit’s combined ratio included $506.3 million favorable development of provisions for claims from prior accident years.

Across the business, Markel reported GWP growth of 19% to $8.5 billion in 2021, alongside NWP growth of 20% to $7 billion, and earned growth in premiums of 16% to $6.5 billion.

Underwriting income improved significantly year over year, from $127 million in 2020 to $628 million in 2021.

The combined ratio improved from 97.7% in 2020 to 90.3% in 2021. Last year, the combined ratio included a loss ratio of 55.1% and an expense ratio of 35.3%, compared to 61.8% and 36% respectively in 2020.

The 2021 technical result included $195 million in net losses and claims adjustment expenses attributed to natural disasters, including Winter Storm Urithe floods of Europe and Hurricane Ida, as well as $15.7 million net losses and claims adjustment expenses resulting from an increase in the company’s net estimate of ultimate losses and claims adjustment expenses attributable to COVID-19.

Thomas S. Gayner and Richard R. Whitt, co-CEOs, said, “Our 2021 results show what we can achieve when our three operating engines – insurance, investments and Markel Ventures – drive us forward. Each contributed significantly to a record-breaking 2021 for many financial metrics, including operating revenue and operating profit, among others.

“Our underwriting operations generated a combined ratio of 90%, reflecting the impact of recent underwriting actions we have taken to improve our profitability while increasing gross premium volume to $8.5 billion.

“We have added two great companies, Shield and Metromont, to our Markel Ventures family of companies in a year in which revenues and EBITDA significantly exceeded previous record levels. Our investment portfolio provided strong returns thanks to the tremendous performance of our equity portfolio.

“We thank our employees, business partners and customers, who all played a significant role in our record year as we continue our efforts to create shareholder value. We are especially grateful to our employees, who performed admirably in 2021 and continue to show their dedication to making Markel one of the greatest companies in the world. »

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Sallie R. Loera